0% credit when credit rating low to avoid payment plan

Stephq1821

Hi all, I'm normally quite good with money but had a few months of very low income and the credit cards I normally pay off every month haven't been paid off and are now accruing interest.  I contacted stepchange who offered to help with a payment plan but this will really impact on my credit rating and I'm worried I won't be able to get a mortgage when it's time to remortgage if I do this.  I'm not sure why but my credit rating is not good at all at the moment - maybe due to minimum payments etc - I also still have a mortgage with my ex who has his own money issues so think that might have affected it.  (I'm unable to remove him at the moment as I can't pass the affordability check and I also need to pay him off).

Anyway I have about £5600 on my credit cards and I'm prepared to pay them off obviously but I hate the interest.  I applied for a capital one credit card but they've asked for a consents bank check and I don't think I will pass as I haven't had a job the past couple of months only universal credits, and I've just started back at a job. Stepchange have said to get a payment plan but I would rather get a 0% credit card to clear it.  Do I have any other options?  The credit cards are currently on breathing space but after that I will get interest again.  Thanks

la531983

May as well just come out and say it - I suspect the chances of you getting a 0% credit card with a limit pushing 6k is between slim to none, and nearer the none.

stu12345_2

is your new job allowing you to make at least min payments.if it does, they look for ways to cut back on expenditure in household and then pay more than min. can you do overtime, even a second job, perhaps an extra seasonal job for a month to help 
is there items you can sell, old jewellery you are not using. do you have car. do you need it. can you get an older car.
is there anything in your monthly expenses you don't need or your overspending.perhaps your shopping bill or a TV subscription. maybe get a lift to work with a workmate. can you walk to work
if you fail the credit check for the capital one card and you try for others, you will damage your credit status even more, as you will be seen as desperate by creditors if you apply for lots in a short space of time.

step change will recommend a payment plan if you can't even meet your min payments after paying your priority bills every month.
so the question is can you meet min payments with this new job.

EssexHebridean

First things first on the 0% cards - have you looked on the MSE Credit Club to see what it says on there about any chances of you being accepted for a 0% BT card? that will give you an idea whether it's an across the board hard no, or if it might be worth chancing an application. 

Allowing that you may well not be able to move all the debt, if you can get a 0% BT card, the thing to do would be to shift the highest interest debt across - or at least as much of it as you could, then set that new card for an amount above the minimum, and focus all your efforts on throwing all surplus at what is left on interest bearing cards. If you are unable to get anything on 0%, then you still need to set minimum payments on unused cards with lower interest rates, while again focusing on paying everything you can to the highest interest one. Then make a diary note to check again on availability of 0% BT cards in 3 months. 

[Deleted User]

Even with a 0% credit card you are not clearing your debt you are simply placing it elsewhere.
Will you be able to pay it off within the 0% agreement term? 

Stephq1821

la531983 said:

May as well just come out and say it - I suspect the chances of you getting a 0% credit card with a limit pushing 6k is between slim to none, and nearer the none.

Ah right thanks. I guess when you put it like that it's too high.  My barclaycard credit limit is £12000 so maybe I've got ahead of myself.  I'm wondering whether to contact them to see if they can reduce the interest if the capital one credit card doesn't work out? Or maybe just transfer some of the debt?

Stephq1821

I'm not sure why it's not letting me reply directly to other people.  Nothing is happening when I press quote now....I can make the minimum payments but that is about it for now.  I think I need to see if I can move some of the debt over and pay as much as I can on the rest.  For example I have a halifax card that I could move most of my amex card over to at about 6.45% i think it is so maybe that could be a way to go? Thanks everyone for the help

Stephq1821

EssexHebridean said:

First things first on the 0% cards - have you looked on the MSE Credit Club to see what it says on there about any chances of you being accepted for a 0% BT card? that will give you an idea whether it's an across the board hard no, or if it might be worth chancing an application. 

Allowing that you may well not be able to move all the debt, if you can get a 0% BT card, the thing to do would be to shift the highest interest debt across - or at least as much of it as you could, then set that new card for an amount above the minimum, and focus all your efforts on throwing all surplus at what is left on interest bearing cards. If you are unable to get anything on 0%, then you still need to set minimum payments on unused cards with lower interest rates, while again focusing on paying everything you can to the highest interest one. Then make a diary note to check again on availability of 0% BT cards in 3 months. 

Thank you! Yeah I can move £930 which is almost all of my AMEX card to 6.9% for 2 years with no fee - so whilst it's not 0% I don't think that's too bad and it will feel better psychologically to almost get rid of a debt.  I have an Asda credit card with £3000 limit that is 0 balance, an M and S card with £1000 limit and 0 balance and a next card with I think £1500 and 0 balance.  I was going to go cancel them all but would it be worth seeing if they can do any 0% offers? I'm not sure if store cards are really open to doing that sort of thing?  Also would it be worth asking barclaycard if they can do me an offer?  I'm a bit worried about approaching it but if it could possibly mean paying a lot less I will go for it.

TheAble

People can get hung up on interest and lose sight of the actual goal, which is to clear the debt as soon as possible. My concern would be if you keep transferring around you're going to build up much bigger debt, unless you're now in a position to start making meaningful repayments. It's better to have £5600 now incurring interest than have (say) £15,000 in a year's time because you've been transferring to 0% offers in the meantime and carried on spending. 

EssexHebridean

Stephq1821 said:

EssexHebridean said:

First things first on the 0% cards - have you looked on the MSE Credit Club to see what it says on there about any chances of you being accepted for a 0% BT card? that will give you an idea whether it's an across the board hard no, or if it might be worth chancing an application. 

Allowing that you may well not be able to move all the debt, if you can get a 0% BT card, the thing to do would be to shift the highest interest debt across - or at least as much of it as you could, then set that new card for an amount above the minimum, and focus all your efforts on throwing all surplus at what is left on interest bearing cards. If you are unable to get anything on 0%, then you still need to set minimum payments on unused cards with lower interest rates, while again focusing on paying everything you can to the highest interest one. Then make a diary note to check again on availability of 0% BT cards in 3 months. 

Thank you! Yeah I can move £930 which is almost all of my AMEX card to 6.9% for 2 years with no fee - so whilst it's not 0% I don't think that's too bad and it will feel better psychologically to almost get rid of a debt.  I have an Asda credit card with £3000 limit that is 0 balance, an M and S card with £1000 limit and 0 balance and a next card with I think £1500 and 0 balance.  I was going to go cancel them all but would it be worth seeing if they can do any 0% offers? I'm not sure if store cards are really open to doing that sort of thing?  Also would it be worth asking barclaycard if they can do me an offer?  I'm a bit worried about approaching it but if it could possibly mean paying a lot less I will go for it.

OK - before we go any further, you need to lose this mindset. You're not getting rid of anything - indeed, there may even be a fee charged to balance transfer if you do manage to get other lower interest deals elsewhere, there sometimes is - instead you are just moving the debt and reducing the overall cost of it. Try to shift the mindset to a positive alternative of "I'm proactively moving this debt so I can tackle it more effectively". 

It is certainly worth looking to see if there are any deals offered on your existing credit cards - I would simply close unused storecards though personally - they aren't going to do you any deals I wouldn't think, and ultimately they almost always have higher interest rates (and taking Next as an example, the items tend to be more expensive anyway!) so best just to remove the temptation to use them. You need to accept that for the time being your affordability level is more Primark than Next, anyway! 

Where you are moving parts of debt to other cards, you also need to be careful that the total minimum payments aren't then increasing to a problematic level. 

It sounds as though it might be a good plan for you to put together your SOA (Statement of Affairs) and post that into this thread - as it doesn't sound like you are currently seeing  much surplus to begin to use in paying down the debt, and in that instance, moving it about doesn't help -  you would need to think about a plan going forwards to actually let you start reducing the debt. 

Stephq1821

EssexHebridean said:

Stephq1821 said:

EssexHebridean said:

First things first on the 0% cards - have you looked on the MSE Credit Club to see what it says on there about any chances of you being accepted for a 0% BT card? that will give you an idea whether it's an across the board hard no, or if it might be worth chancing an application. 

Allowing that you may well not be able to move all the debt, if you can get a 0% BT card, the thing to do would be to shift the highest interest debt across - or at least as much of it as you could, then set that new card for an amount above the minimum, and focus all your efforts on throwing all surplus at what is left on interest bearing cards. If you are unable to get anything on 0%, then you still need to set minimum payments on unused cards with lower interest rates, while again focusing on paying everything you can to the highest interest one. Then make a diary note to check again on availability of 0% BT cards in 3 months. 

Thank you! Yeah I can move £930 which is almost all of my AMEX card to 6.9% for 2 years with no fee - so whilst it's not 0% I don't think that's too bad and it will feel better psychologically to almost get rid of a debt.  I have an Asda credit card with £3000 limit that is 0 balance, an M and S card with £1000 limit and 0 balance and a next card with I think £1500 and 0 balance.  I was going to go cancel them all but would it be worth seeing if they can do any 0% offers? I'm not sure if store cards are really open to doing that sort of thing?  Also would it be worth asking barclaycard if they can do me an offer?  I'm a bit worried about approaching it but if it could possibly mean paying a lot less I will go for it.

OK - before we go any further, you need to lose this mindset. You're not getting rid of anything - indeed, there may even be a fee charged to balance transfer if you do manage to get other lower interest deals elsewhere, there sometimes is - instead you are just moving the debt and reducing the overall cost of it. Try to shift the mindset to a positive alternative of "I'm proactively moving this debt so I can tackle it more effectively". 

It is certainly worth looking to see if there are any deals offered on your existing credit cards - I would simply close unused storecards though personally - they aren't going to do you any deals I wouldn't think, and ultimately they almost always have higher interest rates (and taking Next as an example, the items tend to be more expensive anyway!) so best just to remove the temptation to use them. You need to accept that for the time being your affordability level is more Primark than Next, anyway! 

Where you are moving parts of debt to other cards, you also need to be careful that the total minimum payments aren't then increasing to a problematic level. 

It sounds as though it might be a good plan for you to put together your SOA (Statement of Affairs) and post that into this thread - as it doesn't sound like you are currently seeing  much surplus to begin to use in paying down the debt, and in that instance, moving it about doesn't help -  you would need to think about a plan going forwards to actually let you start reducing the debt. 

Thank you.  Maybe I'm looking at this wrong.  I'll try to work on my SOA.  I need to work out my budget and work out what I can pay off my debts each month and go from there.