Debt Consolidation

bombblast1968

I currently have £35k on credit cards most charging interest at rates of 16-17% as I have not had a 0% balance transfers for a long time except on one card that is already at it's limit!

One of them has £3.5k where the last of my 0% balances hits 28% in a week.

My bank has suggested they would lend me £10k at 13.5%. If I paid off the card that has just given me a 0% balance transfer deal with a bank loan, then transferred some of the other card balances to it would that be a good plan?

What affect would this have on my credit score? and if done, would it be better for my credit score to reduce the limits on the other cards then?

[Deleted User]

Consolidation is very high risk, so the general advice is to never do it. It's not about the credit score, but the risk you represent to lenders and the temptation to run up the existing cards again.

Go to the DFW boards for more holistic advice on cutting costs and repaying faster before you take on another high rate debt.

born_again

They will be expecting to see the card that is paid off closed down. If they don't see that then they could well recall the loan. Leaving you in a even worse situation.

yksi

The usual pattern for people in your situation is to consolidate the credit, breathe a sigh of relief, but continue to spend money on credit and the debt goes UP, not down. This happens because they never correct the behaviour that caused the debt.

Nearly everyone reads the warnings and thinks it won't happen to them, but it happens. It has probably already happened to you - you didn't fix your spending problems when you ran out of credit the first time, so you took on 0% deals, but you still didn't reduce your debt, it just got bigger each time. And now you can't find any 0% deals. Credit card providers are now quite unsure whether you can keep up with repayments. They have thousands of customers who missed payments or defaulted, so they believe it's likely to happen to you. Even your bank knows you are a risk and has attached conditions (the card must be closed, and the loan will have a pretty expensive interest rate).

The best advice is to sit down and look at your entire finances and where you spend your money, and start changing your habits so that you spend less. You need a lifestyle revamp. Urgently. Most in here would tell you not to consolidate because of this "more debt" trap, but if you do go ahead, make absolutely sure that you close the accounts you pay off, and continue to close credit accounts as soon as you can. You've proven to yourself that you shouldn't have had that much unsecured credit in your hands.

Don't reduce credit card limits as this will make future lenders think you couldn't be trusted.