The perils of consolidating debts

55ryan

Having done a bit of work in this area, I would say assuming someone gets the loan, to use it immediately to pay off the credit card. Not the following day or at the weekend, immediately.

The longer lets say 5k is sitting in your bank account, the temptation to spend it will rear its head. I've seen people pay some of the credit card off to make themselves feel better. Then they buy that ring on QVC, weekend trip with the girls, the Amazon summer sale pops up, the kids want to go on a trip with the school for a week, I want another dog. All financed by the loan meant to pay off the credit card.

Consolidation is a risky business, but you have to be strong, you have to be prudent and you have to recognise 'how on earth did I get to this stage in the first place'. Sometimes it is through bad luck, but typically it is simply living beyond your means. Every Friday out with the girls when you could only afford twice a month. The £50 a month phone contract when you should have only got the £20 one or PAYG.  The two weeks in Corfu when you should only have gone for a week or not at all.

Too many live beyond their means. If you are buying regular items on a credit card and not paying it all off each month you are using someone else's money to finance your life and paying for the privilege. 

Having no debt means that the money you make is for you and not for someone else. Good luck to the posters on this thread. 
  

Ebe_Scrooge

icarus_69 said:

Experian quoted me a loan from Admiral - 12 months repayment, 23.9% APR

That is a horrendous rate of interest for a personal loan.  The implication behind it is that your credit history is less than ideal.  Given that any illustration provided by Experian is at best a rough guess, I wouldn't be at all surprised if you found that you were declined for a loan when you actually applied - or else offered on at an even higher rate.

icarus_69 said:

Now, I'm actually in a good place budget wise, and do feel it's coming down steadily.

If that's the case, on the face of it I'd be tempted to forget about taking out another loan.  See if you can shift any of the debt to 0% cards as previously suggested by another poster, cut your outgoings to the bone for a few months, and you could probably nail the debt in pretty short order.

enthusiasticsaver

Thank you for posting this.  So many people fall into this debt consolidation trap so it is good that you have given your experience that it is not a magic fix.