Consolidate Loans?

MrsBee000

I owe £11,000 over four credit cards, all on 0% (except for about £900) however, it gets a bit overwhelming seeing four balances and having to remember the 0% expiry dates on various different balance transfers and having to keep jigging them around.

I know if I applied for a personal loan to consolidate my borrowing the lender only has my word that I will pay off the other borrowing so, as far as they're aware, it will just be another debt I'm incurring.

Is there anyway of consolidating my loans so that I just have one payment per month with one expiry date?

Thanks

CliveOfIndia

MrsBee000 said:

I know if I applied for a personal loan to consolidate my borrowing the lender only has my word that I will pay off the other borrowing so, as far as they're aware, it will just be another debt I'm incurring.

You're absolutely spot on - and for this very reason you may find that you struggle to be accepted for a loan, at least at a decent rate of interest.

MrsBee000 said:

Is there anyway of consolidating my loans so that I just have one payment per month with one expiry date?

Well, a loan is one option - unless you can shift them all onto another card, though I suspect you'd be unlikely to secure a high enough limit to be able to do that.

Two points to bear in mind, though.  Firstly, it doesn't make financial sense to shift an interest-free debt to an interest-bearing debt.  Secondly, you must address the root cause of the existing debt, otherwise there's a high likelihood that once you've cleared the cards you'll start re-building debt on them.  This is one reason why consolidation loans are often not the best idea.

One final piece of advice - you do need a plan for repaying the debt.  There may come a time when you're unable to secure another 0% balance transfer card, and if, at that point you're unable to get a loan, you're in a bit of a pickle.

Martico

Agree - you've probably got (close to) the best deal you can get at the moment if almost all is on 0%. I assume that means you're able to service them? In your position I'd focus on paying as much over the minimum as you can, particularly on the card that's currently charging interest. 

MrsBee000

Thank you for your quick responses.

Firstly, I don't consider myself to be a negligible spender particularly, although, if I'm honest, if I wasn't then I wouldn't owe £11,000...! This isn't because I use my credit card to pay bills or other finances, I used it pay for expensive items, which can be protected by paying on credit cards (TV, children's Playstations, etc)

What I have is manageable, if I stick to the monthly minimum payments. But I do want to clear the debts quicker.

The reason they have become difficult to pay is because I did used to pay more than the monthly minimum but circumstances changed. We used to live in a 2 bed house (me, my husband and two sons) My husband paid all the mortgage, which was only £480 a month, therefore, whatever I earned meant I could pay more off my credit cards. However, our sons got too old to share so we moved to a bigger house, which, of course, has increased the mortgage to £905 per month so I am now paying £425 per month towards the mortgage. This mortgage is only for 12 years so (I am 48 now) I will be 60 when we're mortgage-free (and hopefully credit card debt free as well!)

You're quite right in that it doesn't make sense to shift from 0% to ?%. It's just a little difficult now to try to find spare money to pay off the interest-accruing amounts. I've used up the balance transfer limits on my current cards so I don't have any option for the £900 or so accruing interest. I believe any money I pay off my cards pays off the money accruing interest first and then the 0% so that's something at least.

Transferring the balances costs money, albeit not as much as they would if they were accruing interest.

I'm waffling now because I know there's not much I can do about it.

I just feel so angry with myself for letting it mount up to £11,000.

fatbelly

MrsBee000 said:

I owe £11,000 over four credit cards, all on 0% (except for about £900) however, it gets a bit overwhelming seeing four balances and having to remember the 0% expiry dates on various different balance transfers and having to keep jigging them around.

I know if I applied for a personal loan to consolidate my borrowing the lender only has my word that I will pay off the other borrowing so, as far as they're aware, it will just be another debt I'm incurring.

Is there anyway of consolidating my loans so that I just have one payment per month with one expiry date?

Thanks

While you can afford the contractual minimum payments, what you are doing is the most cost-effective way of paying down your debts and preserves your credit record from defaults etc.

If this becomes unaffordable or if the 0% offers dry up, or you fall into what they call persistent debt, then that is the time to re-evaluate

https://nationaldebtline.org/fact-sheet-library/persistent-debt-ew/

EssexHebridean

MrsBee000 said:

I owe £11,000 over four credit cards, all on 0% (except for about £900) however, it gets a bit overwhelming seeing four balances and having to remember the 0% expiry dates on various different balance transfers and having to keep jigging them around.

I know if I applied for a personal loan to consolidate my borrowing the lender only has my word that I will pay off the other borrowing so, as far as they're aware, it will just be another debt I'm incurring.

Is there anyway of consolidating my loans so that I just have one payment per month with one expiry date?

Thanks

The easiest way to fix the overwhelm issues is to write the details down - with the provider name, and the expiry date of the 0% deal. You could even note it in this thread, so you know immediately where you need to go to check. 

There are realistically no ways to consolidate debt at 0%  - so any options you took on this line would essentially result in you throwing money away, probably not the best idea. 

You won't be the first who'd been drawn into debt by using cards to gain section 75 protection on bigger ticket items - the key thing if you're doing that though is to save up for the item first, then pay for it on the CC, and then transfer the saved money across to clear the cost off the card immediately. It sounds like perhaps you've been doing it back to front by using cards for non-budgeted purchases, and then making further purchases before clearing the previous ones down - would that be right? 

I think you need a budget - as a first port of call, and then a structured plan to clear the debt. You also probably need to retain a single card (for use where S75 is a factor) but to ONLY use that card where the item being purchased has been budgeted for and saved for. 

I'd suggest putting together your SOA (Statement of Affairs) and posting it in to this thread ("Format for MSE" then copy and paste) and let us see if we can help you find ways to cut back and to make savings that will mean you can clear the debt faster - does that sound like a plan? Make the SOA open and honest - and it needs to reflect your situation right now as that helps us to drill down to what has caused the problem in the first place. There is no point in telling us what you think you should be spending - or what you think we expect to see, that doesn't help anyone! 

Have you checked to see if you are able to get a 0% deal for that £900 by the way? Worth keeping an eye for good deals - at that level you may even get a fee-free option. 

MrsBee000

EssexHebridean said:

It sounds like perhaps you've been doing it back to front by using cards for non-budgeted purchases, and then making further purchases before clearing the previous ones down - would that be right?


Have you checked to see if you are able to get a 0% deal for that £900 by the way? Worth keeping an eye for good deals - at that level you may even get a fee-free option. 

Yes, you're right about how I've been purchasing things. Not great, I know.

I have a £1,000 limit on my Barclaycard (with a balance of £869) and a Virgin card with £951 on it. This morning (after posting) I managed to transfer the Barclaycard to Virgin at 0%) and, once that has gone through in a few days, I will be able to transfer the Virgin balance to Barclaycard on 0%. So I will still owe both amounts but both on 0%.

ALL of my borrowing will then be at 0% until August, September and December of this year when I will need to jig some around.

Thank you all for your help so far. Very much appreciated xx

Martico

Good start - what I'd suggest is that once Virgin is on a zero balance, do not use it for any purchases. Keep paying down the others (all at minimum, and decide on one to focus on hammering down - I'd suggest the one closest to the end of the 0% deal)
Then, in July you may be able to switch that one to Virgin on another 0% deal, if one is still open to you. Economise where you can, overpay when you can. It's a long road, but hopefully it's not insurmountable. 
You'll find loads of tips and tricks on the site - on this subforum as well as in Boost Your Income and the diaries section.
In the meantime, see if you can sort out a budget that covers monthly and annual spends, and stick to it religiously. An SOA, as suggested above, is a good way to start. You can choose to share that here if you wish

kimwp

Hiya! You really need to start reducing the debt as you are relying on being able to get other 0% offers to be able to afford the debt and as you say it is costing you in balance transfer fees as well. If you want help in identifying areas where you might be able to find savings, post a statement of affairs (link in my signature) - it's amazing what people haven't spotted in their finances, I guess because it's so familiar.

Something useful to know is that only a small amount of a purchase needs to be paid with on a credit card to get the protection (think it might be £1, best to check), but the key thing as EH mentions is to save for each purchase ahead of buying it. You can then pay it over time if you choose, but you should have the outstanding balance in a savings account somewhere.

Don't beat yourself up, everyone makes mistakes of some kind of other. 

CliveOfIndia

kimwp said:

Something useful to know is that only a small amount of a purchase needs to be paid with on a credit card to get the protection (think it might be £1, best to check)

Technically, if you make any partial payment by credit card then you're covered by S75 (subject to the standard constraint whereby the item must cost between £100 and £30,000).  So you could in theory make a credit card payment of 1 penny and still be covered.

I would hazard a guess that this is probably not going to happen in reality, more likely you'll pay either £1 (as you say) or a small deposit.  But yep, pay any amount on CC and you're covered.

real_name_hidden

I consolidated debt my debt and ended up putting more on cards, then would consolidate again.  It doesn't work.  OH wanted just one monthly payment as it would be "easier" but this just gave us opportunity to spend more.  Personally, if I had my time again, I would use the snowball method on my credit cards.  Consolidation, though "tidies things up" is just as messy in end and will cost you more.