Small Debt advice

Miri_J

I've just gone through a difficult divorce. I'm on a fairly low income and have very few options for borrowing money but I'm managing. I've had to really fight to get a decent settlement from my ex. Basically it's meant that I've used all my savings (I'm about to withdraw the last 7k) and I'm left with a bill from my solicitors (for 9k) that I can't quite pay. There will be a further bill next year when everything is fully settled of about £700 to £1k. The solicitors will allow me to pay the outstanding amount when I can but will charge me about 9% interest on it. I'm selling the house, so when the house finally does sell, all the debts will be resolved. But I may be able to pay it sooner than that. 

My questions are. 
I'm thinking I probably need to hold back about £1k just in case there's a real emergency. (Boiler breaks down or similar.) Or to cover expenses like house surveys, removal costs etc. Do you think that's about right?
I'm wondering do I leave the rest with my solicitor and pay it as and when, or would I be better to I take out a 0% credit card? My credit score is good, and I have done a check and could get a card.
I'm not sure how these balance transfer cards work when I don't already have a debt to transfer to them, do they just transfer the amount into my bank account?
Do I have to wait until I get the second bill and do it then or do the transfer now?
Sorry quite a newbie with this stuff.

Brie

Sounds like what you need is a 0% money transfer deal.  These allow you to have money paid into your bank account rather than on to another credit card. 

They tend to charge a fee for the transfer (maybe 5% of the amount) which is added to the card so that the amount transferred plus the fee can't exceed 95% of your card limit.  So if you had a card with £1k limit the most you could transfer would be would be £904 as there would be a fee of £45.20 which brings you just up the the 95% limit of £950.

Do set up a direct debit to at least pay the minimum each month and be prepared to clear the rest of the balance by the end of the deal.

Don't use the card for anything else as you would be charged interest from the date of purchase because you're not clearing your balance in full each month.

Transfers can be done normally from day 1 of having the card - if there's a deal offered.  You might see an offer that says £5k for 28 months and then when you get the card it's for £3k and the deal is 21 months.  Not much you can do about that unfortunately.

CliveOfIndia

My thoughts, for what they're worth.

Miri_J said:

I'm thinking I probably need to hold back about £1k just in case there's a real emergency. (Boiler breaks down or similar.) Or to cover expenses like house surveys, removal costs etc. Do you think that's about right?

Having an emergency fund is eminently sensible.  Some "emergencies" may be able to be paid for by credit card - if the "supplier" will accept a credit card.  But paying by card without having the means to clear it in full is a risky strategy, as the interest can be crippling - unless you're able to secure a "0% Purchases" card, whereby purchases incur no interest for a specific time period (say 12 or 18 months, for instance).  But then there's no guarantee you'd be accepted for such a card.

You'd need to get some idea of likely costs, but £1000 sounds a bit tight to me for surveys and removal costs.

Miri_J said:

would I be better to I take out a 0% credit card? My credit score is good, and I have done a check and could get a card.

Ignore your credit score, it's not used, nor even seen, by any lender.  But if you can get a 0% purchase card, you can use that for everyday spending, pay back just the minimum each month, and put the remainder of the cash that you've "saved" (by not using it for routine spending) into a savings account for emergencies.

The big caveat with this is, you absolutely must keep some money stashed away to repay the remaining balance in full when the 0% period ends.  Otherwise, the remaining balance will start to accrue interest at the card's standard APR, and there's no guarantee at all that you'll be able to shift any remaining balance to another card.

Miri_J said:

I'm not sure how these balance transfer cards work when I don't already have a debt to transfer to them, do they just transfer the amount into my bank account?

A Balance Transfer card is used where you have an existing balance on an "ordinary" interest-charging credit card.  You transfer that balance to the 0% card, meaning the balance on the old card is now zero, and you're charged 0% on the balance on the new card.  You must still make at least the minimum payment each month to the new card, and - as per my previous comment - you must have the means to repay it in full when the 0% period expires.

There are things called "Money Transfer" cards which deposit money into your bank account, and put a corresponding debit onto the card.  There's usually a fee to pay for this, and as before, you need to pay at least the minimum each month and also be able to clear it when the promotional offer expires.

Martico

Agree with @Brie that a money transfer card might suit best. There's a good guide to digest here

katsu

I wouldn't keep 1k in savings whilst paying 9% to the solicitor as you'll not make 9% on the savings in interest so you'll be in debt longer.