Pay down plans

Barny670

I thought I might share my recent experiences with credit card companies and pay down plans. Hopefully this might help others. I recently contacted Barclaycard to arrange a pay down plan. Initially they wouldn't budge from 17.9% interest at £250 per month over 4 years. They said there was no way they could reduce the interest rate. When I asked if I could pay less per month, £215, that was OK, and the interest rate went down to 7.9%. I don't quite understand, but it seems if you tell them you can afford less per month, the interest rate goes down. 
I also managed to arrange a pay down plan with mbna at 0% interest. I just told them what I wanted to pay each month..without taking the mick. They were very helpful.
Aqua were not so helpful. They would not reduce their interest rate below their standard rate of 34.9%. 
It definitely pays to haggle, but apparently not with Aqua. 

Yahoo_Mail

Presumably, you're going to end up with AP markers from these arrangements, which are not a good look if you want to apply for further credit in the next few years.

Maybe that's the lesser of two evils, but it's worth mentioning.

Ebe_Scrooge

Barny670 said:

I don't quite understand, but it seems if you tell them you can afford less per month, the interest rate goes down. 

That's somewhat over-simplistic but yes, in essence, that's correct.  The major downside is, as per the previous post, your credit history will be tarnished big-time, meaning you'll find it nigh-on impossible to get any further credit (including a mortgage) for the next 6 years.

Barny670

I set up the pay plan with Barclaycard on 6th October. I haven't had any alerts on my credit report and my Experian credit score went up by 110 points this week. I'll report back on any adverse markers on my credit report. 

rosiesposies

If you do not meet the minimum payments set by monthly statement, you will see negative reporting on your credit files either AP or missed. Will take a month or two following payments after statements, but it will happen. 

Ebe_Scrooge

Barny670 said:

I set up the pay plan with Barclaycard on 6th October. I haven't had any alerts on my credit report and my Experian credit score went up by 110 points this week. I'll report back on any adverse markers on my credit report. 

As has been said a million times on this forum, your score means absolutely nothing.  Lenders don't always report to the CRAs immediately - many do it on a monthly basis.  But it'll appear on your files when they do send in their figures.  Also, not all lenders report to all 3 CRAs, so you need to check all 3 (I don't know offhand which agencies Barclaycard report to).

RelievedSheff

As others have already said. Your credit card companies will now start putting AP markers on your credit files so your chances of getting any more credit, be that loans, credit cards or a mortgage are now shot for the next six years.

Pay don plans are not some magic way to reduce the amount that you have to pay back. They do have their downsides as well.

m-holland

But wouldnt pay down plans have other benefits, as long as they are set at a manageable level. Yes there will be an AP marker, but is that any worse than a default or a CCJ?

Barny670

I'm not too concerned about my credit report at this stage. I've got a fixed rate mortgage with 6 years left and I'm not looking to take on any more credit. My main concern is paying back the credit I already have, in a reasonable time, without paying huge amounts of interest. I couldn't get a loan at a decent rate to pay off my cards, so this seems like the best option for me. Just wanted to share my experiences, in case it helps others thinking along similar lines. Thank you to everybody for your comments. 

rosiesposies

It is far better to default now than have 6 years of ap markers. The ap will still be there in 6 years from the date of LAST Payment made ie 2024 as stated above = ap marker doesn’t drop off till 2030. Think this through fully before you go down this route. Either meet the minimum payments and if you can’t, default ASAP and go to a debt charity for support. 

rosiesposies

And made even worse with 3 accounts AP. The damage to a default now will be done in 6 years. AP damage not so until 6 years from last payment made. This isn’t good advice for anyone, sorry