My new plan to get out of the shtook - advice very welcome!

sphector

Hi all

So I have been struggling with debt for a few years. Been on an even keel for the past few months and to my amazement have just been given a 0% credit card with balance transfer.

I have work going forward and want to get rid of debt before getting married and going for a joint mortgage.

Here's what I have got:

Barclaycard - £4477 @ 27% (Limit £4950)
Santander Mastercard - £3747 @ 18% (Limit £5000)
Barclays overdraft - been living in it for ages, limit £3800, rarely positive balance

NEW CARD: MBNA, limit £3800, 15 mnths interest free balance transfer

Credit union savings account i've been building up - £440

PLAN A was to transfer as much as possible of the Barclaycard onto the MBNA card (around £3500), and the remainder as a balance transfer onto the Santander Mastercard, thus clearing the most costly debt.

HOWEVER - been reading around, and would it be better from a Credit Rating point of view, even though it would cost a little more, to do:

PLAN B -

Transfer £2000 from Barclaycard onto the MBNA card
Transfer £1000 from Santander Mastercard onto the MBNA card

Therefore having a lower spread of debt / credit usage ratio across more cards, and keeping on paying them all off at lowered total interest per month?

CREDIT UNION SIDE QUESTION:

Should I keep the credit union account going as is ?
Or, use that balance against the most costly card?
Or, should I take a credit union's loan which is secured against the savings account (no credit check), use the cash to pay down the debt ? (more outgoing per month but interest keeps accruing on the savings)

Many thanks for advice there's light at the end of the tunnel and I want to do it in the most sensible way possible !!!

[Deleted User]

Lenders will look at utilisation as a whole.

Do what is financially most sensible.

DCFC79

Your rating is only seen by you and you alone.

Lenders see your history.

I would have said move as much of the BC debt to the zero percent card.

sphector

Thanks ZX81, would that then be:

Put the credit union savings balance into the Barclaycard

Transfer as much as possible of the Barclaycard onto the MNBA zero interest card.

Transfer the remainder of the B'Card onto the Santander Mastercard

Keep the Barclaycard open and use it for monthly expenses making sure to pay it off completely?

[Deleted User]

Yes - although you also need to consider the overdraft.

What's it costing you? And what would you do if they recalled it tomorow?

sphector

Ashamed to say I don't know what the interest rate of the overdraft is, but it has come down - if I am in the last £500 i get charged £5 / day. I definitely have not forgotten about it - been with the bank since 1992 though and I doubt they are going to call it in when my credit is improving - had it over 10 years. Not complacent about it though...

Would you say just cash out the credit union account or can you see any case for taking the 'secured against savings' loan?

Psychologically it has helped me a lot to know i am accruing savings with a 'good guys' organization even though I understand it is not arithmetically the most sensible.

I assume that if I go to the CU in 2 years for a mortgage length of credit would be a factor...

[Deleted User]

I'd keep some emergency savings back.

But I wouldn't look to the CU when it comes to getting a mortgage.

Verityspinelli

Deleted_User wrote: »

Lenders will look at utilisation as a whole.

Do what is financially most sensible.

That’s interesting, I didn’t realise that they didn’t look at individual accounts. Thanks for that..

[Deleted User]

Individual accounts are looked at as well.

But it's the bigger picture which is important.