Credit Card or Loan?

Aldo67

Hi all, another newbie here

I need your advice. I have approx £4500 over 2 credit cards, £1200 on interest charged card, £3300 no interest, but is due to start charging interest soon (Jan 08)

Despite my plans to cut this amount, it's gradually getting bigger, but enough is enough and it's time to stop.

What I want to know is, am I better to transfer it to a long term low interest card (Approx 5.8%) or take out a loan (Approx 6.8%)

The loan appeals because it would mean I was committed to paying off this debt, over 2.5/3 years for example. Equally, although I dont want to keep spending on the card, it has a greater degree of flexibility and I can adjust my payments depending on my financial situation. (I suppose that's what got me into this mess in the first place, isn't it?:rolleyes: )

Sorry, I'm rambling. Any advice? I want to get rid of my debt and could realistically pay it off over 3 years, providing I dont relapse and start spending madly again

jonesMUFCforever

The problem will lie with the fact that if you take out a loan, then there is always the temptation to start spending on the cards again.
If you take this route make sure to cancel the cards not just leave them in a drawer 'just in case'.

GeorgeUK

I would try to get 0% cards if you haven't had too many credit checks recently and have a decent credit history (no defaults/late payments)

What i am concerned about is that you say you are continuing to get into more debt. You need to get all your finances in order and see where the money is being wasted. May be worthwhile going to the DebtFreeWannabe board and posting up a Statement of affairs (linked in the sticky post at the top of the DFW board).

Aldo67

ejones999 wrote: »

The problem will lie with the fact that if you take out a loan, then there is always the temptation to start spending on the cards again.
If you take this route make sure to cancel the cards not just leave them in a drawer 'just in case'.

That would be the intention

missile

It really depends on your circumstances, attitude to debt and ability to restrict your spending in the future.

£4,500 is not a huge ammount. However, it seems you are having trouble budgeting? Unless you expect to win the lottery, you need to plan how you are going to reduce your expenditure so that you can repay that debt. Getting another card(s) may be storing up even more trouble further down the line.

marsel

In my opinion aether way you will still be in the same predicament sooner or later. I would think about just paying off slowly without digging yourself deeper in financial debt!:eek:

belfastgirl23

I got a bit confused in the middle of your email but I'd say go with the lowest % you can. Personally I do think you should balance transfer to a 0% card if possible and use the DFW board to see how you can get them paid off as fast as possible and not incur any more debt...

Either way I think the key will be addressing either your spending or your income (depending on which is your problem )