Loan vs credit card - what would you do?

imperfecthuman

Hey all,

first post so I hope I’m posting this in the correct area. I’ve been finding myself bouncing from credit card to credit card without actually clearing things off. 

I have 8.8k on one card and 7.4k on the other. What is the most effective way to settle this? 

My credit limit is around 32k maximum on the cards, I’m a mortgage owner etc. 

at the end of each month, after food and bills, minimum payments. I’m only saving around £250 

what would you do in my situation 

BlueJ94

Firstly post a SOA as everyone’s situation is different. I personally rang them and told them my situation and came to an agreement with them to pay off so much a month. Downside to this is that you’re unable to use your cards at all. If you take out a loan to pay off your credit cards you’re going to get yourself into more debt. 

fatbelly

You've got £250 per month surplus. That needs to go to paying down the debt on the cards and the most efficient way to do this is if they are at 0% interest.

https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards/

Martico

As above, if you can get an SOA together there are loads of people here willing to take a look and offer advice. 
My first question would be to ask if you're paying interest on those cards.
I was in a similar position to you a couple of years ago, with CC debts of around 25k. The way I dealt with it was:

Applied for a zero interest balance transfer card and transferred as much as allowable from the highest interest CC. Then I went minimum payments on the zero card and focused on paying off the cards that were subject to interest. After a few months I got another zero percent balance transfer card and did similar. I just sucked it up, reduced my outgoings and hammered at the debts, the most expensive first. I still have £6,800 on CCs, but all at 0% for a while yet. I'm still focused on reducing them. I've also tried to build up a bit of an emergency buffer.

That might not be right for you of course - some more detail would help. And good luck!

peteuk

Consolidation loans only work if you either close the credit card accounts and or you deal with what put you in debt in the first place.

With the COL increasing you may find soon that the £250 saving per month is £150 or worst.  Do you really want to take on long term loan or a fresh credit card?
 

Geordie7865

I've been in your position and i regularly swap credit cards to find the best 0% balance transfer deals - longest terms and lowest fee combination. If you can find one which has a two year deal plus then once you transfer to them it's a case of working out total debt over term - in your case 24 months would be c£675/month. If this is too much then lower your amount to something more affordable. But be disciplined - don't use the card for any purchases etc. IN fact i always cut up the card as soon as i've transferred. That way you only have one CC payment to make each month rather than 2 and even if you don't pay it off in full, before the 0% promotion ends on that card transfer the balance to another card and spread the debt over the term. This along with careful budgeting has helped me loads. I haven't particularly been concerned about savings as i would rather pay these debts off first given savings rates are ridiculously low. That said have some savings for a rainy day if you can.

BadDebtor

imperfecthuman said:

Hey all,

first post so I hope I’m posting this in the correct area. I’ve been finding myself bouncing from credit card to credit card without actually clearing things off. 

I have 8.8k on one card and 7.4k on the other. What is the most effective way to settle this? 

My credit limit is around 32k maximum on the cards, I’m a mortgage owner etc. 

at the end of each month, after food and bills, minimum payments. I’m only saving around £250 

what would you do in my situation 

What you have to realise is that the goal of credit card companies is to put you in their sweet spot, where you can just about afford to SERVICE debt but can't afford to pay it off.  They lend irresponsibly because they lent you money that does not exist.  Their only downside is the lost of the small percentage they pay the central bank.

If you default the debts and can't afford to pay a penny towards them they will eventually sell the debts on to a debt collection agency and the lender will be able to lend the money they created for you to some other mug.  You will then be harassed for six years while you are passed around for all of them to "have a go", unless you a DRO which is unlikely in your situation.

As you have a mortgage and clearly will need any other type credit then you have to find ways to pay off the debt while they are still prepared to tart it to zero percent on other cards.

I would NOT take out loan to pay it off unless I was being charged interest.

You know the answer, throw more money at the debt and cut back in other areas. 

Try to pay lump sums to the card that will end the zero percent soonest (Card1), then call the other firm (Card2) and ask them if they will increase your credit limit on the zero percent if you transfer the remaining debt from Card1.  If they won't then try to transfer both to another zero percent card from this site and destroy the old cards.  Then DECIDE you are paying off the cards, so if you have 27 months work out how much you need to pay and just do it, because if you take out a loan that is all you are doing, the only difference is you are paying more interest on a loan and you risk defaulting on the loan if times get hard while with the credit cards you can reduce the payments to the minimum at any time.