2 x credit cards. Do I apply for a loan ?

Annabelle123

Hi,

I’m currently have £1100 one one credit card @ 25% APR, and another £1000 credit card @ 19% APR.

Would it be smarter to move the higher interest debt to the lower one to keep the debt in one place at a lower rate, OR apply for a loan to consolidate both to one place? Are the rates on a loan better?

My current budget for monthly repayments is £250 per month. Id really like to pay all debt as soon and as cheap as possible.

Any other suggestions would be great!

Thank you

Annabelle :money:

Homegrown0

Can you apply for a 0% interest credit card and balance transfer both card balances onto that? Usually a small fee for transferring but you'll save on interest!

enthusiasticsaver

I second homegrown suggestion. Apply for 0% card and balance transfer both to that. Have you got to grips with not overspending now or were they for something specific?

Taking a loan out to clear credit cards is not recommended for several reasons. First it may be a lower rate than the cards but it will be paid over a much longer period making it an expensive way of clearing debt. Secondly clearing the cards by way of a loan makes some people think that they can then run the cards back up again so before long they have a loan plus more credit cards debt. Debt consolidation does not work.

JohnJ76

As above, if your credit rating is good and you can get a 0% card then go with that. Once you have done that cut up the old cards. Same for the loan option, if you can get a loan (although the smaller the amount the higher the %apr typically) and consolidate the cards, cut them up once you have paid them off, or keep one as an emergency card (although would be better to build emergency savings) and get the credit limit reduced on it so you can't spend and then end up with 3 credit cards or two cards + a loan.
quite a few cards seem to do low % around 3 to 5 % for balance transfers so even if you can't get 0% that may be an option for you. With payments of around £250 a month even with the higher rates you are paying now you'll have them cleared by the end of the year, sooner if you can find a way of finding a few more £ a month.
Good luck!

Mnd

I fully agree with the above, do not get a loan!
Go for the 0% balance transfer card ( don't use this for purchases in the future) anything you do use your credit card for, pay it off in full, every month

Willing2Learn

I agree that a loan is not recommended. If you can get a card with a good BT deal then that would be ideal