Should I consolidate debt?

eh1404

Hi all,
First time poster, long term lurker! So apologies if this is in the wrong place.
Always seen lots of great advice on here so hoping for some help?!

I have just under £9000 in debt - £2000 overdraft from when I was a student (started off interest free, no longer is.) £5000 on one credit card and £1900 on another credit card. (Both credit cards have high interest rates.) This all racked up a few years ago when I was on minimum wage and had to pay large vets bills as the insurance didn’t pay out and car bills.

I’m on a decent wage now and trying to pay these off but the interest is just eye watering. I’ve tried to get a loan to consolidate these but the best interest rate I have been offered is 24.9% and I was considering this as the interest rate is lower than the credit card with £5000 on and the same as the one with £1900 on.

Me and my partner have an appointment next week to see if we can get a better interest rate if we apply for a loan together. Or my grandparents have offered as a last resort to lend me the money to pay off the debt, however they can only do this over 3 months max and I would then need to take out a loan to pay them back.

First of all I’m hesitant to do so many credit checks also I’m not sure if I would get a good apr for a loan if I took up my grandparents offer and then apply for a loan again in 3 months time?

Any advice/ tips!?
Thanks!

Willing2Learn

eh1404 wrote: »

Any advice/ tips!?

Don't consolidate as it is too easy to get into financial difficulties, as you are basically doubling your debt overnight.

Snowball your two debts would be my suggestion, using your 'decent wage' to chisel away at the accounts. You could possibly, once the debts have reduced a bit, be eligible for a Balance Transfer (BT) card at 0% APR. (I am assuming you have already researched your eligibility for a BT card...)

And welcome to the forum eh1404

Edit: What are your credit limits on your two cards please? I think you ideally want to focus on clearing the overdraft first.

[Deleted User]

You're unlikely to be able to consolidate except at a much higher rate, if at all, due to the higher risk and the fact you're doubling your debt.

The best way is to cut your costs and repay faster. Head to the DFW boards for advice and support.

mum2one

Another vote for do nit consolidate its so easy to see the cards paid off and start spending again.

The best bet would be look at your budget, then do the snowball

Eg you have £500 month for debt repayment, basically pay minimum amount off all debts, the one with the highest Apr over oay that one, soon make a difference, then when finished pay ne t highest xx

Willing2Learn

eh1404 wrote: »

...my grandparents have offered as a last resort to lend me the money to pay off the debt, however they can only do this over 3 months max and I would then need to take out a loan to pay them back...

I don't know how I missed this when I first read your post.


This is a terrible idea. It is worse than consolidating. If your loan application gets declined in three months time, then you will be getting your grandparents into financial difficulties.

eh1404

Thank you.

The credit limits are £6700 and £2500 on them. I’ve been focused on paying off the larger one with the higher interest rate first, so been putting anything I can into paying that one and paying just over the minimum payments on the others.

D_M_E

Really is a bad idea.

Try reading the very first thread right at the top of the forum.

https://forums.moneysavingexpert.com/discussion/5567669/unsure-whether-to-consolidate-please-advise

Moneyhelp4u

Hi
Have you checked your credit score? You can do this for free with Experian or Clear Score.
This will give you a guide on what type of credit you might be accepted for.
Be careful, if you have applied for lots of credit this will be leaving a mark on your credit file and could reduce your future score when lenders check it. Look to see if you can be eligibility or pre-approved to remove this risk.
If you have a good credit score then you could consider most lenders at rates significantly below 24%.
You could also apply for a balance transfer credit card. MBNA has a 29 month 0% card with a 2.75% fee.
An alternative to these could be a loan from a credit union, rates are lower than pay day lenders and usually lower then 24%, but you will need to show a stable income and pass their credit score.

Hope that helps as a starter for ten.

On debt consolidation, have you tried a credit union? They offer lower rates of interest compared to pay day lenders.

[Deleted User]

I believe the OP is UK based, so his credit score is of no relevance. They'll be assessed on affordability and risk.

adindas

Ehmmm :think::think::think:
I could only assume this is a troll who has too much time try to upset people in this forum who are getting fed up with the word "credit score". S/he will be chuckling when s/he gets response he wanted .... :cool::cool::cool::cool:

Moneyhelp4u wrote: »

Hi
Have you checked your credit score? You can do this for free with Experian or Clear Score.
This will give you a guide on what type of credit you might be accepted for.
Be careful, if you have applied for lots of credit this will be leaving a mark on your credit file and could reduce your future score when lenders check it. Look to see if you can be eligibility or pre-approved to remove this risk.
If you have a good credit score then you could consider most lenders at rates significantly below 24%.
You could also apply for a balance transfer credit card. MBNA has a 29 month 0% card with a 2.75% fee.
An alternative to these could be a loan from a credit union, rates are lower than pay day lenders and usually lower then 24%, but you will need to show a stable income and pass their credit score.

Hope that helps as a starter for ten.

On debt consolidation, have you tried a credit union? They offer lower rates of interest compared to pay day lenders.

eh1404

Thanks all. I think I pretty much knew deep down what the consensus would be before I posted, just didn’t really want to admit that consolidation was not the best idea (the paying less each month sucking me in.)

I’ve looked on how much I need to pay to snowball it and pretty much on track with that, so guess just stick to what I’m doing for now.