Loan to pay off credit cards

L.gathercole

Hi all, so I'm about 6k in debt over 2 credit cards, marbles and vanquis. I'm paying nearly 300 per month across the pair and due to the high interest etc, it's still costing me about 60per month in interest/fees. Has anybody got any advice on a decent rate loan for roughly the 6 k, which I could pay back the same a month, but not pay anywhere near as much interest? My credit is pretty poor too

enthusiasticsaver

Debt consolidation is not advised when people are in debt because of the likelihood of you running up more debt on the cards once you have taken out the loan to clear them. Most people end up in this cycle and increase their debt in the long run.

To clear the cards the best thing to do is post a soa (statement of affairs on here) and make a budget to stick to. Stop using the credit cards and make a concerted effort to repay as much as possible to them to get the balance (and interest) as low as possible. Target the most expensive card first. In time as your credit rating improves you may be able to get 0% deals or better rates but you will need to reduce the debt first.

If you have a poor credit rating you are very unlikely to get a loan at a good rate if at all so this makes it all moot. How did the debt build up and have you taken steps to change your spending behaviour? Do you know how much you are spending on food and entertainment for example every month? A spending diary is a good start.

Dobbibill

I echo enthusiasticsaver - debt consolidation is not the answer.

Post a SOA on the DFW board and look at your budget.

Pay off as much as possible on the debt, sell things, do overtime, get a 2nd job and clear them.

Also make sure you address the reason for the debt initially, this means you can put things in place to prevent it happening again.

All the best.

L.gathercole

Hi again, I understand the use of an SOA but the issue I have is I'm paying 200 a month across the 2 cards, I can't increase this. The interest across the pair is just shy of 90 per month, at this rate the interest will just keep building and I'll never pay it off

Dobbibill

L.gathercole wrote: »

Hi again, I understand the use of an SOA but the issue I have is I'm paying 200 a month across the 2 cards, I can't increase this. The interest across the pair is just shy of 90 per month, at this rate the interest will just keep building and I'll never pay it off

The SOA will give the friendly forum members an opportunity to look if there are any other ways you can make savings in your budget to throw at the debt - this will in turn allow you to throw additional money at the debt or they can see whether a loan will work.
You may be pleasantly surprised what fresh eyes may see that you haven't noticed.

YorkshireBoy

L.gathercole wrote: »

but the issue I have is I'm paying 200 a month across the 2 cards, I can't increase this. The interest across the pair is just shy of 90 per month, at this rate the interest will just keep building and I'll never pay it off

I'm paying nearly 300 per month across the pair and due to the high interest etc, it's still costing me about 60per month in interest/fees

With respect, you don't seem to know what your true situation is.

Post the SOA, with accurate data.

It's interesting you use the word "fees". Are these late/missed payment fees? If so, then you can forget about loans or other cards for debt restructuring. So you only have two options:

1. Earn more.
2. Spend less.

The SOA will help with the latter, but the former can only be addressed with a higher paying job, second job, and selling stuff.

L.gathercole

Hi, I do appreciate the help, but I've been through an SOA no end of times with stepchange, and various other companies. All my outgoings are spoken for and cannot be changed, my only money saver would be to be more savvy with home cooked meals, I don't go out or drink, I'm paying off debts run up by an ex which I cannot change. The interest was classed as purchase interest, so if nobody can advise a loan company I'll just have to keep plugging away, thanks again though

foxy-stoat

Taking out a loan wont help you in your situation I am afraid as you wont get the cheapest rate, not 3% - more than likely it will run into double figures.

Your best bet if you cannot earn more and spend less is to apply for a 0% balance transfer card - try the eligibility calculator on here. If you have a poor credit history then you may not get accepted but worth a try for a couple of cards. Clear the highest interest car first. If you get a decline then apply again in 6 months.

Not sure you have your figures correct. Marbles interest rate is 35.9% and Vanquish is 39.9%.

Take the higher at the full balance £6000 * 39.9% /12 = £199.50 interest per month.
Take the lower at the full balance £6000 * 35.9% /12 = £179.50 interest per month.

So your £300 payment chips between £100 and £120 off the debt a month 1 @ £6000. The interest will creep down every month by 50p or a pound depending on the number of days in the month. So if will take you 4-5 years to clear the debt if you maintain your monthly payments - assuming you never spend on the cards - EVER.

You need to sell stuff and make more payments if you want to clear it sooner.