Small Debt Help

FighterNo1

Hi,

I am new to the board so please excuse me if I seem naive.

It almost seems that it has just appeared from nowhere, but I have found myself in debt.

Due to purchasing a new house with my girlfriend and buying furniture etc. I found myself needing to borrow money which has mounted up quicker than I thought. The break down is as follows:

3800 Overdraft

2258.26 Tesco CC

1800.55 Virgin CC

Total- 7858.81

I have just started a new job that brings in 1650 per month and my outgoings are approximately 1200.

Basically I am looking for advice on whether to transfer the debt (including OD) to 0% credit cards, or

Transfer just the CC debts to one card, or

consolidate them and pay off in one lump sum per month.

Please help as I do not want this to spiral out of control.

Thanks in advance,

immoral_angeluk

what APR and limits are each of your debts? Generally consolidation isn't a good idea because you don't actually learn anything so it usually ends up being the case where you don't cancel the consolidated cards and eventually end up with double the debt.

FighterNo1

The tesco card is at 16.9% with a 2500 limit and the virgin is at 17.4% with 2300 limit (both just changed). Thanks for the quick reply.

FighterNo1

The overdraft is £4000 with £13.47 charges per month.

SunderlandBlackCat

Most Credit Cards don't give the option of balance transferring an overdraft balance.

Those that do are MBNA & Egg but as you already have an MBNA card (Virgin) you're unlikely to get a very high credit limit & you may also have difficulty in balance transferring to a new MBNA Backed card.

Something else you might want to consider is a low life of balance card such as &More as they don't charge a balance transfer fee & you get the balance transfer rate for as long as you need so no need to worry about finding another card to transfer to in a years time.

FighterNo1

I have just looked at the &more card and the rate p.a. is 7.9% can this be justified do you think? I also cannot find the credit limit for the card, any ideas?

Seaxwyn

Hi fighter, welcome and well done for spotting this problem before it gets out of hand.

If you read the 'credit cards' article on the main part of this site (not the forum) there will be recommendations of the best cards.

I agree a low life of balance card is a good idea. My M&S one is at 3.9% but perhaps they have changed the rate. You can also get a 0% overdraft with an Alliance & Leicester current account.

A bit of research on this site should show the way to get your debts onto the lowest possible interest, and once that's done, concentrate on paying every penny you can onto the highest interest and they will start coming down nicely.

FighterNo1

Thanks all, I shall look at the credit cards now. Just to reitterate, should i transfer the credit cards to a low life of balance card and transfer my current account to a 0% one then pay off the credit cards first?

Seaxwyn

Yes I think that sounds like a good plan.

You can put the debts into https://www.whatsthecost.com to see the best order to pay them off.

In_Search_Of_Me

The first thing is have you actually sat down & done a budget? It is vital at this stage that you plan for paying this off. The way I got it trouble (aside from 37000 of shoping!) was insufficient planning, leaving no money at the end of the money = vicious cycle! I would go for a low LOB card for the mahority & if you can get 0% for o/d then go for it. Have you checked your credit rating? Its also worth phoning existing lenders to say that you are considering leaving, can they give you a better rate (but check your credit rating firs to give you confidence!). One important thing is that if you do get a low LOB card DO NOT SPEND on it AT ALL!! Rate then changes but they dont tell you that (unless you read the teeny weeny print at the bottom with a magnifying glass!!). Hope that helps & well done for sorting this! I agree re non consolidation - never wrks cos you just breathe a sigh of relief and carry on spending rather than learning to live within your means, which is what you need to do! Let us know how you get on & welcome! You could also try selling stuff on ebay etc to make some dosh plus get extra work...have a loo at the old style boards ad you could post your soa so people an see where you can save money!

CHR15

You may have difficulty getting it all moved across due to credit limits.
I found I could only go to £3000 for a new 0% card which I didn't find out until the final stage of application.

Good job on spotting it now though. In my mind a debt of £10,000 is the threshold. Once that is breached you will never get back on track.

Time to look at second hand furniture (house clearances etc) and steer clear of the 42" plasma's and leather recliners.
Go slow, room by room.