What do I do?!

fords127s

Hi, I have £15,500 owing on two 0% credit cards. I BT these every time the full payment is required and pay 1% off each month, about £80 (but I pay £100 off each) that’s £200 per month. 

 Should I keep paying £200 per month forever or consolidate in to a loan, pay £280 per month, and be debt free in 5 years?!

Penguin_

Don't consolidate unless you have addressed the reason you got into debt in the first place.

fords127s

Penguin_ said:

Don't consolidate unless you have addressed the reason you got into debt in the first place.

Yep. Young and very stupid

DrEskimo

Why would you be paying forever, unless you consolidate?

You need to work out a realistic budget to ensure you are not spending more than you earn, work out where you can cut costs, and try to overpay on the credit cards as much as you can. Continue transferring the balance to 0% cards as much as you can so you don't pay interest.

Getting a loan won't fix any of the issues that got you into this position to begin with. In fact all it does is introduce additional costs.

Even if you just direct £280/month that you would be paying on the loan, they would be cleared less than 5yrs.

fords127s

Thank you. The BT only has another year on and as I say, the repayment is 1% but I pay £100 off. I think on most cards, the repayment is now 2.75% which could potentially take my monthly payments to £426. The loan is only £280. Does that make sense?

fords127s

DrEskimo said:

Why would you be paying forever, unless you consolidate?

You need to work out a realistic budget to ensure you are not spending more than you earn, work out where you can cut costs, and try to overpay on the credit cards as much as you can. Continue transferring the balance to 0% cards as much as you can so you don't pay interest.

Getting a loan won't fix any of the issues that got you into this position to begin with. In fact all it does is introduce additional costs.

Even if you just direct £280/month that you would be paying on the loan, they would be cleared less than 5yrs.

Thank you. The BT only has another year on and as I say, the repayment is 1% but I pay £100 off. I think on most cards, the repayment is now 2.75% which could potentially take my monthly payments to £426. The loan is only £280. Does that make sense?

Penguin_

I would continue to pay off as much as you can now & look to do a BT in the future.

Ebe_Scrooge

fords127s said:

Thank you. The BT only has another year on and as I say, the repayment is 1% but I pay £100 off. I think on most cards, the repayment is now 2.75% which could potentially take my monthly payments to £426. The loan is only £280. Does that make sense?

Bear in mind, whilst you're being charged 0% interest, every penny you pay goes to repay the original balance.  If you take out a consolidation loan (never a good idea anyway), then a chunk of your money each month will be paying off the interest.  So your monthly payments may be lower, but you'll pay a lot more overall.

If there's any way you can cut your outgoings to the bone and live like a hermit for a year, and pay off the cards before the 0% rate expires, you'll be doing yourself a huge favour - and your future self will thank you for it in bucketloads.

If you want to think of it this way - take the pain now, then in a year's time you can go out and blow £280 a month down the pub or the casino, or save up for a nice holiday,  or whatever floats your boat ... every month for 4 years!  That's what you would have had to be paying each month to the loan, which you've now got spare in your pocket.

DrEskimo

fords127s said:

DrEskimo said:

Why would you be paying forever, unless you consolidate?

You need to work out a realistic budget to ensure you are not spending more than you earn, work out where you can cut costs, and try to overpay on the credit cards as much as you can. Continue transferring the balance to 0% cards as much as you can so you don't pay interest.

Getting a loan won't fix any of the issues that got you into this position to begin with. In fact all it does is introduce additional costs.

Even if you just direct £280/month that you would be paying on the loan, they would be cleared less than 5yrs.

Thank you. The BT only has another year on and as I say, the repayment is 1% but I pay £100 off. I think on most cards, the repayment is now 2.75% which could potentially take my monthly payments to £426. The loan is only £280. Does that make sense?

Theoretically it would only cost £280/month, but that's based on you being able to get a £15k loan at an APR of 3.5%. Have you actually been offered a loan at this rate?

If not, they would consider your current £15k debt when assessing your risk, so the questions are how likely are you to actually be accepted, and even if you did, what rate would they actually offer?

The reality if you may not have this option available to you, so you need to consider other options. Namely, cutting costs as much as you can, overpaying as much as you can (sell things if needed), then try to BT when the interest free period ends.

Ergates

Go here:   Debt-Free Wannabe — MoneySavingExpert Forum
There are loads of people there how have been in your shoes and can offer advice on the best way to proceed - give advice on ways you can cut down your monthly outgoings (so you can pay off the balance faster), that kind of thing.

Brie

If you pay the minimum required on the card with the longest term left and as much as possible on the one that ends next year then there would be less to worry about in a year's time.  Maybe a BT will be available again then which may be cheaper than the loan and you can continue to reduce the overall debt.

If you post the actual amounts and end dates then maybe we can advise better.