Advice please? Considering going on a payment plan

GlynG

I’m £8,500 in debt now to Barclaycard. I’ve narrowly managed to avoid defaulting on both a Tesco loan and the credit card over recent months but have now fully paid the loan off so Barclaycard are my sole creditor. In my last call to the specialist help people at Barclaycard around a month ago the advisor told me they currently have a 5 year interest free payment plan they can put some people on. I intend to fully pay the debt off but really want to avoid the high interest or ideally interest at all if possible (they have already made loads off me already over time). It’s a high interest cashback card it was never good to spend on and it’s blocked and can’t be used any more. Last month’s interest payment was £170 (though the specialist advisor cancelled this charge when we spoke which was good of them).

 

We went through an income / outgoing chart and it came up with me having several hundred pounds spare a month, which would be enough to pay the minimum payment / interest and if the outcome of the income / outgoing were this I couldn't go on the 5 year interest free plan. I need to adjust the figures I give them, which were largely wildly guesswork anyway. It's hard to predict my income for the next year as my income varies significantly and  I often earn twice as month in a summer month than a winter month and I'm worried my jobs and income could well entirely dry up this winter due to a bad recession related to Covid and Brexit.

For the purposes of calculating my expenses can I say I am putting aside £500 a month to save for buying a van next year? If so I wouldn’t have enough left over for the minimum payment and so could hopefully qualify for the 5 year interest free plan. I’m a self employed tradesman and a van would benefit my tradesman work and enable me to get more further away jobs than working with a bicycle and bike trailer and so boost my income. I don’t know if saving to invest in my work is acceptable for  their calculation or not? If not I might adjust what I say my estimated average income is down so low I can't make the minimum payments and get on the plan that way instead. I'd rather say the van option if I can though and it is true, as if I can arrange the payment plan with them that is where my extra income will go.

 

If they do agree to put me on the 5 year interest plan that would work out to around £140 a month if divided equally over 60 month. This is less than the 3% of the balance per month I originally contractually would have been meant to pay a month and I saw elsewhere that doing this hurts your credit rating each month. At times when I have the money spare can I overpay the amount I pay each month to 3% of the balance?

sourcrates

Hi,

Never do these things on a whim, over the phone, as you have discovered, its mainly guesswork, and was of no use to you at all.

Take your time, write out your budget, everything you spend money on, in other words, do it properly !!

Also, remember, this action will put "AP" markers on your credit file (arrangement to pay) they will be there for 6 years after you clear your balance, so twice as long as a default would be, i`d work out which was the best solution for you, before you agree to anything.

GlynG

Thinking back they did give me one year interest free on the credit card summer 2019 after I broke my wrist and had to spend months on benefits as I had zero income. I’ve missed 12 payments since then though and they stopped the interest free year thing at some point.

 

Does it sound like I’ve had an AR on the card already without understanding previously what one was? If so then would it make my credit card rating any worse by getting a new AR with them to pay the remaining over 5 years interest free as mentioned? Or is the damage done already? I’ve done a bit of googling about AR just now but hadn’t heard of it before. My credit rating is 487 out of 710 on Credit Karma which say it used numbers from Transunion.

 

 

I’m aiming to pay the full £8,500 off by at some point next year but I’d rather avoid interest if possible. Though preserving my credit rating to get vehicle financing in years to come is even more important to me.

Maybe rather than agreeing formally to a new AR I could try and make as large a payment as possible each month but ring up every month and try and talk them out of cancelling one more month's worth of interest due to depression and suicidal thoughts. They've been good with that in the past, though it'll be a pain if I have to have those kind of conversations every month with them.