Persistent debt and the high APR method

deux_x_m

I'm in a similar situation in that i was paying a couple of quid over most card minimums while prioritising one debt at a time. I got a PD e-mail from Barclaycard who suggest a specific amount to be paid each month to ensure I get out of persistent debt in a certain time frame. It's frustrating as its an additional £80 I would prefer to pay to a higher interest card, but seems the sensible thing to do. Maybe this is something Capital One could agree to as opposed to a single lump sum?
I also reviewed my other cards to ensure I am paying off more in capital than the interest chgs.
So far only one (typically the highest interest) has contacted me abut PD. That was last month and as it will be paid off in 20 months and I am now paying more off the capital I'm ignoring them!

Ergates

deux_x_m wrote: »

I got a PD e-mail from Barclaycard who suggest a specific amount to be paid each month to ensure I get out of persistent debt in a certain time frame. It's frustrating as its an additional £80 I would prefer to pay to a higher interest card, but seems the sensible thing to do.

Read what they've sent you carefully, and maybe speak to someone at Barclay's too. It's possible/likely that the figure they've given is just a *suggestion* (they're obliged of offer you such advice). Also, that time frame they've given to get you out of PD may be shorter than necessary. From their perspective this is the correct thing to do - the sooner you get out of PD the more money it'll save you. However, they don't have the wider perspective of the other debts you have at higher APRs - clearing those first will save you more in the long run.

In terms of PD, as long as you're paying off more balance than interest - even if it's only by a few quid, then you'll be out of PD 18 months after your first letter. It sounds like you may be doing this already - though check that your "couple of quid over most card minimums" is enough to actually do this.

SecretDuck

Update - last month, I was sure that I paid more capital than interest. Despite this, Barclaycard is forcing me to pay £79 more per month or they'll suspend the card. I read the letter very carefully and it is a demand, not a suggestion.

A part of me wants to comply with the demand, another part of me wants to just let Barclaycard suspend my card and spend that extra £79 more on paying off Marbles, which has the highest balance and APR.

The new rules are not making paying off several credit cards easy, that's for sure.

sourcrates

The “persistent debt rules” have not been thought out very well, a lot of people are been asked, or told, to pay quite large amounts of money, that they can’t always afford, it’s a bit of a double edged sword, it’s likely more people will default as a direct result of this legislation, and that wasn’t how it was supposed to be.

If these payments are unaffordable, then you have the option to default on them, your credit won’t be good, but your life may be a lot easier, remember payments to debt collectors are always more affordable.

fatbelly

SecretDuck wrote: »

Update - last month, I was sure that I paid more capital than interest. Despite this, Barclaycard is forcing me to pay £79 more per month or they'll suspend the card. I read the letter very carefully and it is a demand, not a suggestion.

A part of me wants to comply with the demand, another part of me wants to just let Barclaycard suspend my card and spend that extra £79 more on paying off Marbles, which has the highest balance and APR.

The new rules are not making paying off several credit cards easy, that's for sure.

Have you only just started to get persistent debt letters from Barclaycard? My understanding is that they have to give you 18 months of warnings.

Can you do a balance transfer away from Barclaycard? Or is now the time to go full scale into a debt management plan?

SecretDuck

sourcrates wrote: »

The “persistent debt rules” have not been thought out very well, a lot of people are been asked, or told, to pay quite large amounts of money, that they can’t always afford, it’s a bit of a double edged sword, it’s likely more people will default as a direct result of this legislation, and that wasn’t how it was supposed to be.

Agreed - the rules seem only to assume that people in persistent debt have 1, maybe a maximum of 3 cards. But I have a total of 9 cards and even though I did increase my income substantially, I can't afford abnormally large payments on all cards at the same time.

If these payments are unaffordable, then you have the option to default on them, your credit won’t be good, but your life may be a lot easier, remember payments to debt collectors are always more affordable.

Maybe I should just let the suspensions happen. I have too many cards anyway and once I'm debt-free, I surely won't keep all cards open. This in fact makes the decisions easy.

fatbelly wrote: »

Have you only just started to get persistent debt letters from Barclaycard? My understanding is that they have to give you 18 months of warnings.

Can you do a balance transfer away from Barclaycard? Or is now the time to go full scale into a debt management plan?

I've gotten letters for quite some time. I only just increased my income by a lot by moving jobs, so I can afford to start to pay off the high APR debt first. But the persistent debt rules are hindering this tried-and-trusted method.

I'm not sure whether I can reset the clock with persistent debt if I do a balance transfer, nor do I know if I am eligible.

JonVarnas

If I was 10K in debt and this included an Aqua card I'd probably default in all honestly. Knowing the rates they charge unless you're able pay down a serious amount each month you'll end up getting nowhere and default eventually so it's better to get the pain over with now and put all the cash you would be paying into a rainy day account.

SecretDuck

Honestly, Barclaycard and Capital One are more worrying as they are the loudest in terms of persistent debt.

It is strange that even though I paid £61 in capital and £39 in interest last month for Barclaycard, they said it's not enough and I have to pay more?

Dandytf

JonVarnas wrote: »

If I was 10K in debt and this included an Aqua card I'd probably default in all honestly. Knowing the rates they charge unless you're able pay down a serious amount each month you'll end up getting nowhere and default eventually so it's better to get the pain over with now and put all the cash you would be paying into a rainy day account.

I am approx 1/5th of the balance you mention with Aqua.
Avoiding large one off payments is tempting as is repaying over 48 months.
I'm using helptosave savings hoping to avoid defaulting and not starting yet another 6 years of trashed credit reports.

redux

SecretDuck wrote: »

It is strange that even though I paid £61 in capital and £39 in interest last month for Barclaycard, they said it's not enough and I have to pay more?

I don't know anything about details of the regulations, but if this was also accompanied by a certain amount of new spending, I could see some sense in condition flags remaining.

Apologies if that guess is wrong.