Credit card debt has spiralled

BlueManc10

Thanks for the kimwp said:

Sorry, not had a chance to think about this, but a couple more thoughts - you have to be very careful about how you do this, but you can effectively transfer debt from the higher interest accounts to lower/zero by putting your monthly spends on 0% cards and using the cash to pay off the higher interest accounts - just make sure you don't end up with more debt overall.

I get where you are coming from with the loan - it seems sensible to reduce the interest being charged on debt. Debt consolidation for fewer/lower monthly payment rings alarm bells on here because often people who do it end up using the freed money for extending their lifestyle and almost invariably end up in more debt. Also, I don't think you'd be able to use balance transfer offers to pay it off, so you would have to get a rarer money transfer or you'd be stuck with the interest rate while paying it off each month. If you're aware of these possible disadvantages, but it still makes financial sense then I don't think it should automatically be ruled out.

Thanks for this. I know what you mean. I have two weeks to make a decision on the loan. The funds have been transferred but I can return and cancel within 14 days with no penalties, so suppose I just need to do some thinking and decide the best route. If I can get accepted on this second BT card and get a decent amount I think this is a better route to take. If I could get circa £6k onto a 0% deal for 18 months minimum, and then with the 6/7 months I have of balances already on deals. This would mean approx £11k of my debt would be at 0% for a good chunk of time and I can really make inroads on this over the next 12/18 months which would then leave me a much more manageable chunk to attack after that, when hopefully my incomings will be a lot better, my outgoings under control and potentially more offers become available. 

I think if I paid of that £11kish and was left with a debt in single digits it's a lot less daunting. 

kimwp

I was just looking to try to understand when the expiry dates of the 0% offers are counted from, I didn't find that, but I did find -

People who take advantage of these (0%) offers sometimes find themselves on the hook for unexpected interest charges. The problem is that transferring a balance means carrying a monthly balance. Carrying a monthly balance by not paying off the minimum amount due each month—even one with a 0% interest rate—can mean losing the card’s introductory APR, its grace period and paying surprise interest on new purchases.

The grace period is the time between the end of the credit card billing cycle and the due date of the bill. During that period (by law, at least 21 days but more often its 25 days) a cardholder doesn't have to pay interest on new purchases. But the grace period only applies if a cardholder is carrying no balance on the card. What many consumers don’t realize is that carrying a balance from a promotional balance transfer can affect the grace period if minimum payments aren't made each month.

BlueManc10

kimwp said:

I was just looking to try to understand when the expiry dates of the 0% offers are counted from, I didn't find that, but I did find -

People who take advantage of these (0%) offers sometimes find themselves on the hook for unexpected interest charges. The problem is that transferring a balance means carrying a monthly balance. Carrying a monthly balance by not paying off the minimum amount due each month—even one with a 0% interest rate—can mean losing the card’s introductory APR, its grace period and paying surprise interest on new purchases.

The grace period is the time between the end of the credit card billing cycle and the due date of the bill. During that period (by law, at least 21 days but more often its 25 days) a cardholder doesn't have to pay interest on new purchases. But the grace period only applies if a cardholder is carrying no balance on the card. What many consumers don’t realize is that carrying a balance from a promotional balance transfer can affect the grace period if minimum payments aren't made each month.

Noted. But I do pay my monthly minimum payments on all cards each month via direct debit and never miss any of these so I have never lost any promotional rates. The reason the dates all end at different times is purely as I have transferred money from higher rate cards when offers have become available 

RAS

What are the limits on your HSBC and Tesco cards?

Any way you can use them to buy stuff, and immediately pay exactly the same amount off the Very account? Taking that £1200 down from 44.9 to 24.9 or 24.6% would the worth it if you can't use the 0% card.

And close the Very account. By knickers and socks in physical shops, otherwise it's chazzers.

kimwp

BlueManc10 said:

Thanks for the kimwp said:

Sorry, not had a chance to think about this, but a couple more thoughts - you have to be very careful about how you do this, but you can effectively transfer debt from the higher interest accounts to lower/zero by putting your monthly spends on 0% cards and using the cash to pay off the higher interest accounts - just make sure you don't end up with more debt overall.

I get where you are coming from with the loan - it seems sensible to reduce the interest being charged on debt. Debt consolidation for fewer/lower monthly payment rings alarm bells on here because often people who do it end up using the freed money for extending their lifestyle and almost invariably end up in more debt. Also, I don't think you'd be able to use balance transfer offers to pay it off, so you would have to get a rarer money transfer or you'd be stuck with the interest rate while paying it off each month. If you're aware of these possible disadvantages, but it still makes financial sense then I don't think it should automatically be ruled out.

Thanks for this. I know what you mean. I have two weeks to make a decision on the loan. The funds have been transferred but I can return and cancel within 14 days with no penalties, so suppose I just need to do some thinking and decide the best route. If I can get accepted on this second BT card and get a decent amount I think this is a better route to take. If I could get circa £6k onto a 0% deal for 18 months minimum, and then with the 6/7 months I have of balances already on deals. This would mean approx £11k of my debt would be at 0% for a good chunk of time and I can really make inroads on this over the next 12/18 months which would then leave me a much more manageable chunk to attack after that, when hopefully my incomings will be a lot better, my outgoings under control and potentially more offers become available. 

I think if I paid of that £11kish and was left with a debt in single digits it's a lot less daunting. 

Fingers crossed for the BT offer coming through.

Referring to your earlier question, I'd always go for transferring the more expensive debt over the smallest debt unless the number of debts is causing you stress. Once you've got this initial period of sorting out your plan done, it's only going to be once a month-ish plus when you are approaching the end of an offer that you're going to have to think about the debts individually to figure out if you need to change any payments or adjust your plan. But if it could reduce stress, transfer the smaller ones first.

backinbusiness

BlueManc10 said:

it sounds strange to say, but the amount of money i pay back over the time isn't my main priority, it's more managing all the different outgoings and DDs and feeling more in control.  

Hello BlueManc10 - the above sentence in a previous post really gave me the fear, so I'm very glad you've decided against a loan.  You sound like you have a good plan in place so I wish you the best of luck. BiB x 

BlueManc10

RAS said:

What are the limits on your HSBC and Tesco cards?

Any way you can use them to buy stuff, and immediately pay exactly the same amount off the Very account? Taking that £1200 down from 44.9 to 24.9 or 24.6% would the worth it if you can't use the 0% card.

And close the Very account. By knickers and socks in physical shops, otherwise it's chazzers.

Hi. I could do this. But to be honest that's when I would start to not trust myself to be frugal enough and not pay exactly what I spent. Also that HSBC card is the one I want rid of first to he honest as it's given me the most headache. That's the one that I've almost got down to 0 a few times and then used again and I've had issues with DDs being cancelled and paying it is a nightmare and the app is rubbish....so my first port of call is probably going to be to get that transferred and out of my life. 

 But my Tesco one does have a limit of 3.5k so I could use this. 

BlueManc10

kimwp said:

BlueManc10 said:

Thanks for the kimwp said:

Sorry, not had a chance to think about this, but a couple more thoughts - you have to be very careful about how you do this, but you can effectively transfer debt from the higher interest accounts to lower/zero by putting your monthly spends on 0% cards and using the cash to pay off the higher interest accounts - just make sure you don't end up with more debt overall.

I get where you are coming from with the loan - it seems sensible to reduce the interest being charged on debt. Debt consolidation for fewer/lower monthly payment rings alarm bells on here because often people who do it end up using the freed money for extending their lifestyle and almost invariably end up in more debt. Also, I don't think you'd be able to use balance transfer offers to pay it off, so you would have to get a rarer money transfer or you'd be stuck with the interest rate while paying it off each month. If you're aware of these possible disadvantages, but it still makes financial sense then I don't think it should automatically be ruled out.

Thanks for this. I know what you mean. I have two weeks to make a decision on the loan. The funds have been transferred but I can return and cancel within 14 days with no penalties, so suppose I just need to do some thinking and decide the best route. If I can get accepted on this second BT card and get a decent amount I think this is a better route to take. If I could get circa £6k onto a 0% deal for 18 months minimum, and then with the 6/7 months I have of balances already on deals. This would mean approx £11k of my debt would be at 0% for a good chunk of time and I can really make inroads on this over the next 12/18 months which would then leave me a much more manageable chunk to attack after that, when hopefully my incomings will be a lot better, my outgoings under control and potentially more offers become available. 

I think if I paid of that £11kish and was left with a debt in single digits it's a lot less daunting. 

Fingers crossed for the BT offer coming through.

Referring to your earlier question, I'd always go for transferring the more expensive debt over the smallest debt unless the number of debts is causing you stress. Once you've got this initial period of sorting out your plan done, it's only going to be once a month-ish plus when you are approaching the end of an offer that you're going to have to think about the debts individually to figure out if you need to change any payments or adjust your plan. But if it could reduce stress, transfer the smaller ones first.

I think I will do this. But my worry is if I have two more cards I need to get a couple closed as having six on the go is going to give me anxiety. 

Also if I was to transfer from the higher interest cards ie the Virgin money, would the BT come from the higher interest portion automatically? As I don't want to be transfering debt that's in a 0% promo 

londoner2019

Payments are usually allocated to the highest interest balance first - but do double check (it usually says on your statements). You could put the 3k on the Barclaycard to wipe out its interest, and almost all of the 0% that drops in a month and a half. Then the Barclaycard is on 0% until early 2024, along with your new card.

Then you're left with just 9.4k (ish) that's accruing interest which you can focus on, along with the store cards.

Well done on getting everything lined up! If the Money Transfer option is available, do that to get rid of as much of the store card balances as you possibly can.

BlueManc10

londoner2019 said:

Payments are usually allocated to the highest interest balance first - but do double check (it usually says on your statements). You could put the 3k on the Barclaycard to wipe out its interest, and almost all of the 0% that drops in a month and a half. Then the Barclaycard is on 0% until early 2024, along with your new card.

Then you're left with just 9.4k (ish) that's accruing interest which you can focus on, along with the store cards.

Well done on getting everything lined up! If the Money Transfer option is available, do that to get rid of as much of the store card balances as you possibly can.

That was where I was at. And also if my second 0% comes through I could get some of that HSBC card over to there too from that 9.4k.