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best way to tackle credit card debt

25 replies 2.3K views
Hi all,
So really want to clear our credit card debts this year and have had to rely on them far too many times last year due to one thing or another. 

We have 3 credit cards and 1 loan. We never miss any payments etc not struggling with the debt so to speak but just want to get rid of it in the quickest and cheapest was possible. Am I best just to snowball the credit cards or should I look at getting a loan to consolidate everything?

Credit card 1 - £3,400 with HSBC and is 0%
Credit card 2 - £4,350 - Santander 16% 
Credit card 3 - £650 - Fluid 19.9% I think?
Loan was for new windows we had couple of years ago, repayment is £114 a month and it was for 10 yrs in total at 9.9%

I have printed off a sheet for the 1% challenge so following that. I have got a lot of credit in my name so not eligible for any further 0% balance transfers yet and the top two cards are both near their limits. So shall I wait and try and balance transfer or shall I look at a loan and consolidate the payments. Homeowners too btw.

Thanks in advance! 



tackling credit card debt - HSBC £3400 - Santander £4400 - Fluid £650

Emergency fund £580/£1000
«13

Replies

  • edited 24 February at 11:12PM
    Willing2LearnWilling2Learn Forumite
    5.7K posts
    Seventh Anniversary 1,000 Posts Name Dropper Photogenic
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    edited 24 February at 11:12PM
    The most MSE way is to snowball the cards whilst waiting for a juicy BT promotion.

    BTW, your signature needs updating (the formatting is different on the new forum)  :)
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • jagger86jagger86 Forumite
    111 posts
    Fifth Anniversary 10 Posts Combo Breaker
    The most MSE way is to snowball the cards whilst waiting for a juicy BT promotion.

    BTW, your signature needs updating (the formatting is different on the new forum)  :)
    thank you for replying!

    Yes I haven't logged in for a while, will get that done thanks.
    tackling credit card debt - HSBC £3400 - Santander £4400 - Fluid £650

    Emergency fund £580/£1000
  • EssexHebrideanEssexHebridean Forumite
    10.3K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
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    jagger86 said:
    Hi all,
    So really want to clear our credit card debts this year and have had to rely on them far too many times last year due to one thing or another. 

    We have 3 credit cards and 1 loan. We never miss any payments etc not struggling with the debt so to speak but just want to get rid of it in the quickest and cheapest was possible. Am I best just to snowball the credit cards or should I look at getting a loan to consolidate everything?

    Credit card 1 - £3,400 with HSBC and is 0%
    Credit card 2 - £4,350 - Santander 16% 
    Credit card 3 - £650 - Fluid 19.9% I think?
    Loan was for new windows we had couple of years ago, repayment is £114 a month and it was for 10 yrs in total at 9.9%

    I have printed off a sheet for the 1% challenge so following that. I have got a lot of credit in my name so not eligible for any further 0% balance transfers yet and the top two cards are both near their limits. So shall I wait and try and balance transfer or shall I look at a loan and consolidate the payments. Homeowners too btw.

    Thanks in advance! 



    Definitely do OT consolidate the cards - the reason? The bit I have highlighted in bold in the post quoted above... 

    Your first step is to get a budget in place, and start living by it - you might find the SOA calculator that we point people towards is helpful for this. Once you are budgeting for costs, then you are on the right path to no longer rely on the cards - and once you have made budgeting work for you for a while you *may* be a decent candidate for consolidation. 

    Santander - keep your eyes peeled for a 0% BT for this one.
    Fluid - depending on what monthly surplus you have it may not be worth the hassle of BT'ing it - how much per month could you scrape together to throw at this? Either way it is your current priority to throw your surplus at. 

    All the cc's - even the 0% one - set the monthly standard payment to a fraction above the minimum payment and leave it there - so maybe round up to the next £10 for example. This then increases the amount that you pay off over time. HOWEVER doing this replies on you NOT using the cards - otherwise you will run into trouble. 

    As for that loan - I'd personally be looking to see if you can get a loan at a lower rate to pay this one off - might be worth exploring what the MSE Credit Club suggests for you on options for this as it may be with your other debt you're not a good candidate for applying for another loan right now. 


    First thing though - that budget. Once you have completed the SOA why not post it into this thread and we can see if we can spot any savings you may have missed. 
    MORTGAGE FREE 30/09/2016 :D
    SOA CALCULATOR (for DFW newbies): SOA Calculator
  • AndyjfletAndyjflet Forumite
    219 posts
    Part of the Furniture 100 Posts
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    Simply in this case I would use the Dave Ramsey method, save £1000 in an emergency fund and then do some plastic surgery, cut up your cards. The start with the lowest balance first for quick motivational wins, in your case the interest is stacked that way anyway. Then I would attack the loan snowballing from the cards to the loan to clear off quicker. 
    Baby Step 1 - £150 saved for emergency fund
    M&S Loan £13395.66 inc interest full term
    M&S Credit card 0% £3640.18
  • On_my_wayOn_my_way Forumite
    405 posts
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    I would use the Dave Ramsey method- see the post above as it helps to change behavioural financial issues too :)
  • jagger86jagger86 Forumite
    111 posts
    Fifth Anniversary 10 Posts Combo Breaker
    Sorry guys i missed these replies not logged in for a while!

    Thanks some great advice. The fluid card has been including an optional extra payment anyway so been doing that, going to start snow balling it soon though and reassess in 6 months and see if we can get a better loan rate for the loan.
    tackling credit card debt - HSBC £3400 - Santander £4400 - Fluid £650

    Emergency fund £580/£1000
  • jagger86jagger86 Forumite
    111 posts
    Fifth Anniversary 10 Posts Combo Breaker
    jagger86 said:
    Hi all,
    So really want to clear our credit card debts this year and have had to rely on them far too many times last year due to one thing or another. 

    We have 3 credit cards and 1 loan. We never miss any payments etc not struggling with the debt so to speak but just want to get rid of it in the quickest and cheapest was possible. Am I best just to snowball the credit cards or should I look at getting a loan to consolidate everything?

    Credit card 1 - £3,400 with HSBC and is 0%
    Credit card 2 - £4,350 - Santander 16% 
    Credit card 3 - £650 - Fluid 19.9% I think?
    Loan was for new windows we had couple of years ago, repayment is £114 a month and it was for 10 yrs in total at 9.9%

    I have printed off a sheet for the 1% challenge so following that. I have got a lot of credit in my name so not eligible for any further 0% balance transfers yet and the top two cards are both near their limits. So shall I wait and try and balance transfer or shall I look at a loan and consolidate the payments. Homeowners too btw.

    Thanks in advance! 



    Definitely do OT consolidate the cards - the reason? The bit I have highlighted in bold in the post quoted above... 

    Your first step is to get a budget in place, and start living by it - you might find the SOA calculator that we point people towards is helpful for this. Once you are budgeting for costs, then you are on the right path to no longer rely on the cards - and once you have made budgeting work for you for a while you *may* be a decent candidate for consolidation. 

    Santander - keep your eyes peeled for a 0% BT for this one.
    Fluid - depending on what monthly surplus you have it may not be worth the hassle of BT'ing it - how much per month could you scrape together to throw at this? Either way it is your current priority to throw your surplus at. 

    All the cc's - even the 0% one - set the monthly standard payment to a fraction above the minimum payment and leave it there - so maybe round up to the next £10 for example. This then increases the amount that you pay off over time. HOWEVER doing this replies on you NOT using the cards - otherwise you will run into trouble. 

    As for that loan - I'd personally be looking to see if you can get a loan at a lower rate to pay this one off - might be worth exploring what the MSE Credit Club suggests for you on options for this as it may be with your other debt you're not a good candidate for applying for another loan right now. 


    First thing though - that budget. Once you have completed the SOA why not post it into this thread and we can see if we can spot any savings you may have missed. 
    Thank you for this. Yes our main thing was not sticking to a budget and also my husband does overtime and sometimes gets 5 week pay months so we were always spending that before we had it! So taking a different approach this year and have allocated a set salary which we are going to live by, then any extra to that is going to be used for things that cost extra (such as weddings, hen do's etc which we have this year for family members) and all surplus is going onto debts. Some months it can be £300 extra and some months £900 extra so doing it this way we should be able to snowball quite a bit once we have outstanding commitments paid. Once all the debts are paid off as well this will also set us in good stead for saving this surplus money! 

    I will do an SOA when i get chance but i know roughly.
    All our direct debits are £1800
    I budget £350 for food and household supplies
    £100ish for fuel depending on where we go that month (husband bikes to work)
    Our minimum income is £3200 a month but can sometimes be as much as £4000. 
    I have also started a new job which is part time so i am earning less but not paying any childcare and there is also commission available so will start having that soon! 

    We relied on the credit cards too much before when working away and not paying it off, changing jobs and paydates and then not being prepared for emergencies as had no emergency fund. All cut up now though! 
    tackling credit card debt - HSBC £3400 - Santander £4400 - Fluid £650

    Emergency fund £580/£1000
  • tealadytealady Forumite
    3.4K posts
    Part of the Furniture 1,000 Posts Mortgage-free Glee! Debt-free and Proud!
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    I would get out your last 6 mths CC statements and look at what is on them.
    If it is "luxuries " such as takeaways then you know where to cut back.
    If it is essentials such as food, rent, transport then you need to look at EVERYTHING you are paying out and either cut out or see if you can get better deals.
    If you are feeling brave post an SOA, there us nothing like a fresh pair of eyes to help identify potential savings.
    HTH
    Proud to be an MSE nerd
    Judge people by their achievements, not by their mistakes
  • jagger86jagger86 Forumite
    111 posts
    Fifth Anniversary 10 Posts Combo Breaker
    Household Information
    Number of adults in household........... 2
    Number of children in household.........2
    Number of cars owned.................... 2

    Monthly Income Details
    Monthly income after tax................ 1010
    Partners monthly income after tax....... 2500 average sometimes more
    Benefits................................ 0
    Other income............................ 137 child benefit
    Total monthly income.................... 3647

    Monthly Expense Details
    Mortgage................................ 597
    Secured/HP loan repayments.............. 147 for car and 114 for windows loan 
    Rent.................................... 
    Management charge (leasehold property).. 0
    Council tax............................. 105
    Electricity............................. 
    Gas..................................pay 115 for both on set DD 
    Oil..................................... 0
    Water rates............................. 39 
    Telephone (land line)................... 0
    Mobile phone............................ 56 for both
    TV Licence.............................. 13
    Satellite/Cable TV...................... 45 with broadband
    Internet Services....................... above
    Groceries etc. ......................... 350
    Clothing................................ 10
    Petrol/diesel........................... 120 
    Road tax................................ 12
    Car Insurance........................... 33 + 26 total 59
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 24 adventure ASC and 14 football club 40 for both swimming lessons
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 3
    Buildings insurance..................... 
    Contents insurance...................... 33 for both
    Life assurance ......................... 35
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 20
    Haircuts................................ 45 every 6 weeks
    Entertainment........................... 100
    Holiday................................. 200
    Emergency fund.......................... 0 (will start putting 50 a month away as want to pay cc first)
    Total monthly expenses.................. 2296


    Assets
    Cash.................................... 
    House value (Gross).....................
    Shares and bonds........................ 
    Car(s).................................. 
    Other assets............................ 
    Total Assets............................ 

    No Secured nor Hire Purchase Debts

    Unsecured Debts
    Description....................Debt......Monthly...APR
    HSBC .......................3400.......   85........0%
    Santander                 4350          105        16%    
    Fluid                            650           39         19.9%
    other pp's                                     90
    Total debt repayments 319


    Monthly Budget Summary
    Total monthly income.................... 3647
    Expenses (including HP & secured debts) 2296
    Available for debt repayments........... 1351
    Monthly UNsecured debt repayments....... 319
    Amount left after debt repayments....... 1032




    not sure if I have done this right, couldn't find a link to an SOA when I searched so just copy and pasted someone else's on another post.

    Please note this is the current situation which is much better, i now work part time however last year was working full time (as this was the only job offer I could get) for 1500 a month but spending 700 a month on nursery etc. My youngest qualified for 30 free hrs in September so that made a big difference but I didn't; go part time until November when I changed jobs. I was also out of work for 6 weeks last year and was unpaid for that period.
    tackling credit card debt - HSBC £3400 - Santander £4400 - Fluid £650

    Emergency fund £580/£1000
  • edited 15 March at 10:09PM
    prb1984prb1984 Forumite
    17 posts
    Sixth Anniversary 10 Posts Combo Breaker
    edited 15 March at 10:09PM
    There's nothing obscene in that SOA.
    And with your current situation I would just say get cracking on smashing those debts down the 1k left over.
    If you wanted to hell for leather you could skip a holiday this year and also shave the entertainment budget a bit. But to be honest either way I would be funding a 1k emergency fund before I put anything towards a holiday!!
    Do you have a smart meter - the elec/gas might be a touch high. 
    Just be clear with yourself you are being totally honest with the figures and there is nothing you're missing off. You should be able to be debt free in 5 or 6 months if this is all accurate (depending on the loan? I couldn't see it here unless i missed it)
    EDIT: Are you really only spending 240 a year on birthdays and xmas presents? Great if you are, I just suspect this figure probably isn't right?
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