Managing Credit Card Debt

diyer22

Hi. I am hoping someone might be able to help with managing two credit cards if possible.

I have two 0% credit cards, one sat as 92% utilisation and one at 40% utilisation. I also have a £20K loan at 7.9% APR.

I have paid off £5k of the loan and was looking at getting another loan at £15k to pay off the remainder of the original £20K loan hoping that the interest rate would be lower than 7.9%.

Obviously I know that the representitive APR is offered to 51% of customers, so I could get stung, but other loans are showing a 2.8% Representitive APR, which would save a lot of money over the term.

I also think the high utilisation on the credit cards will force lenders towards a worse interest rate if I try to get another loan.

1:) Is it worth requesting an increase on the credit card limit to reduce the utilisation, or will that just put a negative stamp on my credit file?

2) Is it better to balance transfer both credit card balances to a single 0% when they run out, or look for two separate 0% cards?

Thanks in advance.

ThisnotThat

With the large outstanding debt you have, I wouldn't worry about utilisation.  Lenders are going to be far more concerned about what you owe, than what you owe in relation to the limits you have.

As to getting one card vs two it doesn't matter, but you may be forced to get two due to the limits offered (and you may not even get offered one in the first palce.)

Its_not_paranoia

What's you're income?

A lender will look at it like this:
diyer has credit card debt of what, 10k?, and a loan with 15k outstanding. And they want another loan of 15k. That'll bring their debt to: 10k? (credit cards)  + 15k (old loan) + 15k (new loan) = diyer wants to be 45k? in debt.

They don't consider that you'll be paying off one loan with another, as the reality is often people do not. 

If the total planned debt is more than half your income, then it'll be a decline or a high rate. 

The way to get rid of debt is to pay it off, not to borrow more. 

Sncjw

Your effectivly doubling your loan debt. The lender won't know you will use it for to pay another loan. Also they will assess your affordability on 30k in debt and also your credit cards.

If your struggling now you will struggle more. 

diyer22

Ok that makes sense. Thank you all.

So I think the best course of action is to pay off the 0% Credit Cards as quickly as possible, which will reduce overall debt by around 7K leaving the 15K on the loan ticking over. Then re-evaluate what options are available at that point as the capital of the loan should have also come down a little bit.

Thank you again for your help.

born_again

diyer22 said:

Ok that makes sense. Thank you all.

So I think the best course of action is to pay off the 0% Credit Cards as quickly as possible, which will reduce overall debt by around 7K leaving the 15K on the loan ticking over. Then re-evaluate what options are available at that point as the capital of the loan should have also come down a little bit.

Thank you again for your help.

To add to the other posters.
Any lender will look at income to debt % & your affordability to repay them.

Brie

Have you tried talking to the loan provider?  It's possible that they may decide that it would be better for you (and more importantly them!) to offer you a lower rate to ensure you can clear the debt.  

And if they don't lower it frankly I would ensure you pay as much of the 7.9% as you can and let the 0% ride assuming that you will be able to clear them in some way at the end of the 0% window (rather than the remains going to 28% or worse)

Sncjw

When does your 0npwecent deals end 

diyer22

Thanks all for your input.

The 0% end in a few months, so I will have to balance transfer anyway so I guess it does make sense to put everything into the loan as it has a higher interest rate.

I will also soeak to the loan provider and hopefully like you suggested they may help.

Thanks again.