Loan to pay off credit card?

in Loans
6 replies 512 views
MaccMacc Forumite
205 Posts
Part of the Furniture 100 Posts

Business was hit hard by pandemic. Self employed and I fell through the cracks of furlough and got nothing until the 4th grant this year. Had to live off the credit card for a few months last year and now got 5k on there @ 18%

Looking to get a 5k loan to pay off. I know a loan to pay off a card isn't ideal but there's zero chance of me paying the card off via surplus anytime soon as going to take a year or 2 at least before business is making decent profit again. So I'm thinking I may as well be paying off a low rate loan slowly than a high rate card. Is that sound logic? Have tried getting a 0% balance transfer but not been accepted.

I think I could get the 5k with my current bank from what they have said. 

Sorry for the rambling stream! Just looking for a bit of advice on what is best really as I really hate paying so much interest on the credit card and want it gone. Is there an alternative to the loan that I'm not thinking of?


  • MaccMacc Forumite
    205 Posts
    Part of the Furniture 100 Posts
    Loan is 4.5% @ Santander btw
  • ItsComingRomeItsComingRome Forumite
    505 Posts
    500 Posts Name Dropper
    They're going to ask what your income is and if you expect it to be affected in the near future.

    Many won't consider SEISS as income and it appears your business hasn't picked up so you'll have to answer yes.

    Most likely they won't be lending at all, let alone at 4.5%
  • Is there a guarantee you will get 5k, or the 4.5%? The bank will consider your existing debt + loan against your income to see if that is affordable, if your income is not reliable or sufficient they won't lend to you. You could try for a sub-prime BT card, even if you get less than 5k, at least you can have it 0% for a period (or maybe even a lower rate BT interest deal)?
  • MaccMacc Forumite
    205 Posts
    Part of the Furniture 100 Posts
    Cheers guys, not sure I'll get the loan I agree. Had informal chat at the bank the other day when I was there about something else and the guy seemed to think I would but not sure if that is his area to know. I do understand I'm far from ideal loaning material right now.

    I looked into a sub-prime card transfer but once you take into account the fee there doesn't seem much saving considering they are only 6 or 9 months @ 0% (though still better than leaving at 18% granted). It would be a start of chipping away at it though so I'll do that if can't get a decent % loan.

    Have to say I've not been in this position before and now totally understand how people get stuck in a perpetual cycle of being in debt. Paying off debt that barely goes down because of high interest and no alternative because no-one will have you at a lower rate is horrible.  
  • sourcratessourcrates Forumite
    26.6K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    I don`t know if this card is causing you hardship, or if your business is likely to pick up again, but if it is causing you sleepless nights, then I can almost guarantee that 90% of the time consolidation is not the way forward.

    Don`t be afraid or ashamed to consider debt solutions here as a possible alternative.

    An informal debt management plan may be of benefit to you.

    Obviously I don`t know your full circumstances, but don`t wedge yourself deeper in debt when remedies to deal with it already exist.
    Ex MSE Board Guide.

    More than a third of IVA`s fail....fact.
    Could A Debt Relief Order help you ?
    Never pay a fee for a Debt Management Plan.
    For free non-judgemental debt advice, contact either : Stepchange, National Debtline, or CitizensAdviceBureaux.
  • frankglemstonefrankglemstone Forumite
    6 Posts
    First Anniversary First Post
    it always better to consider other options than getting a new loan
    Hi there
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