Debt Consolidation vs Credit Cards? Credit Utilisation question!

in Loans
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JC1212JC1212 Forumite
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Hi all,

A quick question. I've been paying off my debts for over a year now and haven't missed a payment in over 12 months, for the first time in 5 years! I've been offered a debt consolidation loan which would cover off 2 of my higher-interest credit cards. I accepted one amount however I'm now thinking that perhaps I should have taken a higher offer (£7,000 instead of £5,000) to further clear another balance (of the same interest as the loan) and potentially lower my credit utilisation.

The question is, do loans count towards the overall credit utilisation as much as the credit cards?



  • Ebe_ScroogeEbe_Scrooge Forumite
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    In short, yes.  When assessing your credit status, a lender will look at all debts - credit cards, loans, buy-now-pay-later, whatever.
    Consolidation loans need to be treated carefully.  If you've actually secured a loan that will allow you to clear a higher-interest credit card, then great.  But you must be super-disciplined and not go and run up further debt on the card you've cleared, otherwise you'll simply end up with twice the debt you originally had.
    There's little to be gained from switching the other card to a loan at the same APR.  Other than giving you, as the adverts used to say, "One easy payment", you won't actually save anything.  And in these days of online banking, is it really that much hassle to maintain two monthly payments rather than one?
  • edited 13 August 2021 at 9:11AM
    bargainbettybargainbetty Forumite
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    edited 13 August 2021 at 9:11AM
    Debt is debt is debt. As Ebe says, it doesn't matter which one. 

    You could try calling the provider of the now-empty card and asking if they have any 0% periods or low-life of balance transfers available. If they offer a significantly better rate than the other card (including transfer fees etc) then you could move that money to a lower rate. 

    If they say no, close the account and cut up the card so you can't run it up again. Trust me, it's way too easy to creep up and a lot of us on here have done it (I did it twice). 
    Some days, it's just not worth chewing through the leather straps....
    LB moment - March 2006. DFD - 1 June 2012!!! DEBT FREE!

    May grocery challenge £45.61/£120
  • JC1212JC1212 Forumite
    10 Posts
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    Thanks all! I've decided not to take the further loan, as they would have to another hard search! 
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