Advice regarding unsecured debt

duncanmcinnes

I have £10K unsecured debt over 3 cards, and looking at the best options available to me. No 0% transfer cards available to me at the moment, after using the soft checker on the website. Would a debt consolidation loan be advisable...? It would be my intention to cut cards up and not use if debt consolidated.

[Deleted User]

Debt consolidation is not a good idea, people are very very rarely disciplined enough, no matter how well intentioned, to pay off the debts and then never use the cards again. That is why any lender will look at debt consolidation affordability on the basis of existing debt PLUS the loan i.e. 2x the debt as they have no way of ensuring you will use the loan for that and not on say a holiday or a new car hence why it's unlikely. In the days of local banks with a friendly manager they could agree this and pay off the cards in branch with you and then close them. These days it's simply computer says no.

Have you looked at BT offers on the sub-prime market?

Otherwise, I would suggest you go to the debt free wannabe page on here for advice on budgeting and paying off your debts. If you are disciplined, the logical snowball method would work for you - pay the minimum on the cheapest 2 cards and throw all your cash at the highest interest one, you clear more capital each month and thus reduce the interest going on, once that is cleared, the money available can go on the second most expensive card and then the third.

The alternative is to speak to the lenders about financial hardship and whether they can freeze your interest or stop charges etc so you can made in-roads into the debt, lenders have to do this these days and it might help you get over your problems faster.

yksi

I believe that since you're not being offered any transfers, you likely won't be offered a consolidation. Banks are already concluding your current level of debt isn't affordable for you. A consolidation, as Farfetch noted, would ADD the loan to your total debts not exchange them. This is because they have thousands of customers with loads of data of people exactly like you and they all behave in very predictable ways. They know that people take the loan and then blow out the debt, even if it's done gradually on grocery shopping, and they are then unable to cover the repayments.

The banks know all this and pay people a lotta money to study all the stats and they know you're a bad risk.

The better question is to ask why people do this? It's because they don't address the reason they got there in the first place. And the answer is they spent more money than was coming in. It really is that simple.

Britain has an abysmal level of financial education really, people just don't understand how the pennies add up and land them in this kind of situation, nor what credit is costing them and how best to avoid it or get out of it.

Go with the above advice and examine absolutely everything in your life and where the money is being spent, and figure out ways to reduce your spending. Every pound matters from the chocolate bar in the weekly shop to the quick Costa to the Disney+ subscription: you need to trim the fat and chip away at the debts the way that you're supposed to, not push them away for another ten years via BT or consolidation.

Nebulous2

As said above - while it works for some people, consolidation wouldn't be recommended by most people on here. 

Here is an inspiring tale for you to read.

https://forums.moneysavingexpert.com/discussion/5567669/unsure-whether-to-consolidate-please-advise

ratrace

From my own personal experience i had a credit card that had £6900 owing @ 20.9% which was costing me aprrox £110 just in interest, i did consolidate and took out a £7,000 @ 5% loan over 60 months paying aprox £30 in interest

i could not make a dent in the cc card as the intrest alone was killing me

I did cancel the card as soon as i paid it off with the loan money straight over the phone.

i must admit i was very disciplined and never used any cc's again but i do know family members who did the same thing and then went on a shopping spree with the cleared cards

if you are very very disciplined and know you will cancel the cards then go for it but if you are not and cant trust yourself then i do not recommend it as it can end very badly, i have grow to hate debt seeing money going out everymonth made me feel sick. hope this helps