Credit card debt has spiralled

jokono

I suggest you try and rein in spending first. You say the option to respend is almost taken away, but what if you end up paying the loan and then add a card or two because "almost" is not "definitely ". Consolidation is only a good option when budgeting and spending is under control.

Ask me how I know 🙃

BlueManc10

jokono said:

I suggest you try and rein in spending first. You say the option to respend is almost taken away, but what if you end up paying the loan and then add a card or two because "almost" is not "definitely ". Consolidation is only a good option when budgeting and spending is under control.

Ask me how I know 🙃

I do get what you mean, but I think the spending thing is already underway to be honest and what has brought me here in the first place. I'm kind of strong willed in that respect and once I set my mind to something I do become a little obsessed with it. I think the issue in the past was that as the debts were split across various cards, no one debt seemed scary in isolation, it was only when I logged in to check my credit score and saw the total debt, that alarm bells went off. 

I think by getting the loan, and paying off and closing down 2 cards, paying a large chunk off the third and transferring the debt to a 0% card, so in effect closing 3, (granted by effectivley opening 2 new ones) would give me a sense of purpose and positivity and then spur me on to clear down all these amounts ASAP. 

Martico

If it were me, I wouldn't take on a 17.9% loan. The 3,000 balance transfer is great - you could clear the highest interest rate card immediately, and put more to work on your other cards. If you are able to clear another CC, you may find that that provider then also offers you a 0% BT a bit further down the line. The more you can chip away at the high interest rates, the better and faster you'll be clear.

Brie

I agree with Martico and not go for the loan.  

Go for the balance transfer.  With that £3k pay off 3 of the cards and a bit on another.

I'd hit these 3 first as it will eliminate the highest interest and nuke the other 2 completely making life simpler. 

Store Card.....................1200......79........44.9

Store Card.....................767.......44........24.9

Credit Card....................620.......25........24.6

Then I'd close the store cards.  Leave the CC in case another 0% pops up on it.

You'll have to pay the minimum (& I'd stick to that or near enough) on the 0% card and smack any extra on the biggest debt here.  I like to set a set amount on my cards like £100 and if you did something similar then you would have less to manage.  The minimum will always be taken but when the minimum gets below your set amount (so min is £99 but your set is £100) you will automatically be paying a bit extra to that card each month.  

While at this point the difference between 26.6% & 24.9 is not huge you should still chip away at the highest to take advantage of that bit of difference.  So cards to be tackled in this order:

Credit Card....................6718......258.......26.6

Credit Card....................6584......112.......26.49
Credit Card....................3729......89........24.9

Hoping you continue to do well in clearing all this up!!!

th081

I would take the loan if no other options. You have obtained a 3k card is there a chance of another zero deal? It won't hurt to apply with the soft check not being shown on your cra account. If you can't get a zero deal then I would put all your figures in a spreadsheet and crunch the numbers to see if you would pay more interest with the local overall. 

As already suggested your existing cards when clear may come back with a zero deal. 

BlueManc10

Brie said:

I agree with Martico and not go for the loan.  

Go for the balance transfer.  With that £3k pay off 3 of the cards and a bit on another.

I'd hit these 3 first as it will eliminate the highest interest and nuke the other 2 completely making life simpler. 

Store Card.....................1200......79........44.9

Store Card.....................767.......44........24.9

Credit Card....................620.......25........24.6

Then I'd close the store cards.  Leave the CC in case another 0% pops up on it.

You'll have to pay the minimum (& I'd stick to that or near enough) on the 0% card and smack any extra on the biggest debt here.  I like to set a set amount on my cards like £100 and if you did something similar then you would have less to manage.  The minimum will always be taken but when the minimum gets below your set amount (so min is £99 but your set is £100) you will automatically be paying a bit extra to that card each month.  

While at this point the difference between 26.6% & 24.9 is not huge you should still chip away at the highest to take advantage of that bit of difference.  So cards to be tackled in this order:

Credit Card....................6718......258.......26.6

Credit Card....................6584......112.......26.49
Credit Card....................3729......89........24.9

Hoping you continue to do well in clearing all this up!!!

Hi. Thanks for the advice. However the store cards are not payable with the 3k as they are credit accounts as it were with next and very and so technically not credit cards. My 0% is only on BTs and so if I paid these off this would be classed as a purchase? Is that correct? 

Also, I've been doing more delving into my accounts on the "store cards" and only about 30% of the total balances are at that astronomical interest rates as most of the amounts owed are on buy now pay later agreements such as the TV and these all have a while left to run. 

Not sure if that changes the equation slightly?

BlueManc10

Also to add to previous points and forgive my ignorance, but if it was to get another 0% offer in the future for a larger amount, can I then not pay off the loan with this and do it that way around? As there are no fees to pay early and also I've done some reading online and they are quite open to settlement offers to close the account so I could potentially get a 0% offer in the future and pay this off on said card?

Martico

Ah yes, that does change the equation. Your priority, from what I can see, is to kill the high interest store cards as soon as you can. And then cancel those accounts / cards immediately. 

In your case, perhaps a loan to cover those store cards might make sense, as long as you do destroy them. But only take out as much as you need to pay those off. Then you could also hopefully use the BT to pay off some of the interest-bearing CCs, assuming that a BT is still open to you after taking out a new loan - I imagine they might then baulk at a BT if they see you've taken on new credit.

Edit: others might well disagree and come up with a better strategy - wait a while for responses before considering your next move

BlueManc10

th081 said:

I would take the loan if no other options. You have obtained a 3k card is there a chance of another zero deal? It won't hurt to apply with the soft check not being shown on your cra account. If you can't get a zero deal then I would put all your figures in a spreadsheet and crunch the numbers to see if you would pay more interest with the local overall. 

As already suggested your existing cards when clear may come back with a zero deal. 

I totally get what you are saying but I think for me the loan option although it may be more expensive just feels like I'm making a dent psychologically as this will pay off cards that are then gone forever and I know that each month that money is going towards a debt that won't return. Whereas if I'm just paying multiple CCs the temptation to dip back in is always there. 

Does that make any sense? 

Martico

It does make sense, and no-one knows you better than you. 
It's good that you're considering all options, and hopefully will come to the decision that's right for you.