Need advice on applying (or not) for a new balance-transfer credit card

ChrisLV

I’m one half of a high-income but formerly high-spending couple currently recovering from debt. We’ve made reasonable progress, going from over £70k debt two years ago to around £45k now. In fact, we’ve just got to the point where I’m thinking we can get the majority of our debt onto 0% or low-interest products so that we can really kick our repayments into high gear. This is where we are at the moment:

£14k at 13%        My Personal Loan

£12.3k at 6%      Wife’s Student Loan

£8.7k at 23%      My Credit Card 1 (0% period just ended)

£5.3k at 24%       My Credit Card 2

£3.5k at 0%         Wife’s Credit Card

£2.2k at 21%       My Credit Card 3 (0% ended a few months ago, but close to paying it off)

£500 at 6%          Wife’s personal loan—last payment is September!

Joint take home after pension payments is £5400pcm, but because of debt repayments, there’s not much left at the end of any given month and my Experian credit score is only 812. We don’t own our own home and our assets are under £10k. On the good side, for the last year and a half, we haven’t used debt products of any kind other than a rewards card that we pay off in full each month.

So, up until a few days ago, my plan had been to keep paying off my CC3, fully paying it off by October. I’d then wait for the next 0% transfer offer on that card and transfer all my CC1 debt to CC3 at 0%. Then I’d wait for the next 0% offer on my CC1 and transfer all my CC2 debt there. That would leave us with all CCs at 0% and we could then attack my personal loan and knock it out in a year. With that gone, we would then be able to finish off the remaining CC debt fairly quickly.

 

But then a few days ago, I saw that I was eligible for a new 0% balance transfer card. So, of course, I’m tempted to get that to see if I can accelerate my plans to get all CC debt on 0% and repay that personal loan sooner. But I remember the last time I applied for credit…

It was for the aforementioned rewards card, with only a £2k limit. But as soon as I got that card, two things happened:

1) My Experian credit rating dipped substantially (and hasn’t recovered).

2) The CC1 and CC2 companies both wrote to me to say that my credit limits were being reduced.

 

Needless to say, that shook me a bit. So now I’m wondering whether I should risk something similar happening if I apply for another balance transfer card or whether I should just play it safe and put up with higher interest payments until CC3 is paid off in October.

 

Am I being paranoid or am I right to worry about the potential negative effects of applying for yet another balance transfer card?

foxy-stoat

Yes, forget about your credit score.  Just pay the minimums for the 0% or low interest cards and over pay the highest interest card(s) down.  Once you finish the loans use that money to pay into the cards also.

You might want to try and increase credit limits on the other cards and see if there are any 0% offers available rather than apply for another credit card.

ChrisLV

Thanks @foxy-stoat. I think I'll still need a few days to work up my courage and take the credit score hit to apply for the new card, but I'll steel myself to it! I think I could get credit limit increases on existing cards, but as none of them are currently at £0, my 0% transfers would go on top of existing debt at >20% interest. Mathematically, that might still be the right call, but psychologically it bugs me having high-interest debt on a card that I can't pay down until I've paid off all the 0% interest on the card first.