Advice Needed - Clearing Credit Card Debt with Balance Transfers

danw3010

Hi, for the past year I've been trying to clear off my credit card debt that was built up during the first couple of years in Covid. I'm 37 years old and only ever took out a credit card during that time so I'm not very savvy in terms of how to manage and clear the cards properly avoiding paying too much interest.

So far I have 3 credit cards, BIP, Vanquis and Virgin Money.

The first one I took out was with Vanquis in 2020, I was given a limit of £1,000 and unfortunately by 2021 I had almost maxed this card out, so I took out another credit card with BIP and was given a limit of £3,700. Over time I was given credit limit increases and I ended up accumulating around £6,500 of credit card debt towards the end of 2022.

At the beginning of 2023 I managed to get myself reasonably financially stable again and began to focus on getting these debts payed off as the interest on them is getting silly.

I first applied for a 12 month 0% balance transfer credit card with Virgin Money. They only granted me a £1,300 limit due to my current situation. As the interest was higher on the BIP credit card I decided to transfer the full £1,300 from that account. I then worked out how much I needed to pay Virgin each month to clear that card before the 12 months interest free period runs out.

I have almost cleared off my Virgin Credit Card now, just £130 left on it which I'm looking to make the final payment in January. My Vanquis account is down to £350 so I'm just going to pay £100 on it in January and clear the rest in full in February. That will then just leave me with the BIP account with just under £4,000 left on it.

Now this is where my knowledge on credit cards is a bit sketchy..... Question is, once the Virgin and Vanquis cards are both settled, what do I do next?

Do I keep these accounts alive and not use them to keep my credit utilisation down? Or do I close them?

I want to apply for another 0% balance transfer and start attacking the BIP account again, but I'm concerned if I still have active accounts with Virgin and Vanquis, even though they have £0 balances on them, could that affect the amount of credit I could apply for when applying for a new card?

Thanks in advance 👍
Hope you all had a great Christmas and all the best for 2024 😁

MorningcoffeeIV

danw3010 said:

Do I keep these accounts alive and not use them to keep my credit utilisation down? Or do I close them?

Neither.

Keep them and use occasionally to keep them open.

born_again

Depends on how restrained you are. If there is a danger of using them & racking up more debt, get shut.

End of the day, lenders look at income to available credit & credit history (missed payments). Not credit utilisation.

Mark_d

I would close the Virgin and Vanquis card accounts.  I think this would make it more likely that your new 0% card will have a limit big enough for you to pay off your BIP credit card.

MrFrugalFever

The Op has stated that has never had a credit card up until 2020 - hence the Vanquis (thin credit file by sounds of things) so closing both Vanquis and Virgin could in fact prevent the OP from obtaining any further credit with decent promotional rates / terms and limits.

Personally, I would - with great restraint - keep open both Vanquis and Virgin, only putting a little bit of spend on them each month and paying off in full so no interest accrued. This could be a tank of fuel, food shop, cheap meal out etc, but only what you can pay off there and then from your current account.

Use a lenders own eligibility checker, such as NatWest, Lloyds, MBNA, TSB. This will not have an impact on your credit files (only soft searches carried out for eligibility checks) and will give you an idea on what cards you'll likely get accepted for an in some instances what the limit will be. 

Remember to be true and consistent in your form filling.

If you go on to fully apply for the product after being 'provisionally approved' or 'highly likely to be accepted' then you will incur a hard credit search. One on its own is unlikely to cause any significant issue but multiple (and multiple declines) will mean you'll need to take a different approach to clearing the BIP credit card and may want to head on over to the Debt Free Wannabe board for further tips

th081

Virgin might give you another zero deal once you have cleared the card. 

danw3010

Thanks for all your comments guys, much appreciated.
 
I think from the answers I've read I'll keep the Vanquis and Virgin accounts open until I've got a new 0% card. I won't rack up debt with them again, between 2020-2021 I was literally surviving on them as my income dramatically dropped. I've got a good stable income now and I am determined to get this debt paid off.

MrFrugalFever - thank you for the advice on applications and credit searches, I'll be sure to follow that.