Loan to pay off cards

blondeyk89

Hi

I have 3k credit card debt. 
Three different cards different interest rates, 30.4%, 39.9% and 30%

According to clear score I could be eligible for a loan which would be enough to pay these cards off (rate 39.95%)

Would you do this? 

I want to be rid of the cards. I can cut 2 of them and keep 1 for absolute emergencies! 

Then that would mean rather than having the different providers to pay each month it's just one payment of £173 for 2 years (potential to pay quicker). 

Or just keep chipping away at each card?

RobM99

Maybe I've missed something but this looks daft.

PropertySense

That American dude (What's his name?) with the balloon popping had a great system:  work the smallest one into non-existence and then move the payments made on the smallest debt onto the next smallest until that is gone.  Then, once that is gone, place all your payments onto the last one.  Of course you still need to maintain min payments on the 2 larger one... Dave Ramsey... that was the American guy!

blondeyk89

PropertySense said:

That American dude (What's his name?) with the balloon popping had a great system:  work the smallest one into non-existence and then move the payments made on the smallest debt onto the next smallest until that is gone.  Then, once that is gone, place all your payments onto the last one.  Of course you still need to maintain min payments on the 2 larger one... Dave Ramsey... that was the American guy!

Thank you. They are all similar so I guess start with the one with the highest interest rate.

Grumpelstiltskin

' I will keep one for emergencies'  That is the beginning of the slippery slope back into even more debt.

Can't you see all you would be doing is moving the existing debt sideways into an even higher interest rate.

Can you explain how that is the best way forward?

MattMattMattUK

blondeyk89 said:

Hi

I have 3k credit card debt. 
Three different cards different interest rates, 30.4%, 39.9% and 30%

According to clear score I could be eligible for a loan which would be enough to pay these cards off (rate 39.95%)

Would you do this? 

I want to be rid of the cards. I can cut 2 of them and keep 1 for absolute emergencies! 

Then that would mean rather than having the different providers to pay each month it's just one payment of £173 for 2 years (potential to pay quicker). 

Or just keep chipping away at each card?

You are going to move your debts from 30.0% and 30.4% to a higher interest rate of 39.95%, that is an absolutely awful idea!

You should be paying the maximum amount you can on the card with the highest interest rate until it is cleared. That means cutting back on all non-essentials to clear the debt. 

blondeyk89 said:

PropertySense said:

That American dude (What's his name?) with the balloon popping had a great system:  work the smallest one into non-existence and then move the payments made on the smallest debt onto the next smallest until that is gone.  Then, once that is gone, place all your payments onto the last one.  Of course you still need to maintain min payments on the 2 larger one... Dave Ramsey... that was the American guy!

Thank you. They are all similar so I guess start with the one with the highest interest rate.

Do not start by moving your debt to an even higher interest rate, that is a huge step backwards, not forwards. 

If you are struggling with budgeting then post an SOA on so people can look help you with budgeting. 

https://www.lemonfool.co.uk/financecalculators/soa.php

ChampagneSupernova36

Hey @blondeyk89

I was in a similar situation in 2021 with 6 credit cards and was enticed into a loan of £4k. This cleared all of my credit cards and I then had one monthly payment, and a much smaller one at that. The APR was about the same as yours and I owed nearly £8k on the loan with it all added together , I then maxed out all cards again and ended up in an even worse situation than I was before.

unless you can really  trust yourself with those emergencies , don’t do it !!! 

CliveOfIndia

This is a terrible idea on so many counts.

Firstly, the illustrative loan rate you've been given is far from guaranteed.  Since a lender cannot force you to use the loan to pay off existing debt, they have to assume that any loan would be in addition to - rather than instead of - your existing debt.  They will therefore assume you'd be carrying double the debt when they do their affordability calculations, which will affect the rate they actually offer you.

Secondly, it's all too easy to use the loan to clear the credit cards, then merrily go out and start spending on them again - meaning you could well soon be in double the debt you started out with.

Thirdly, the idea of moving the debt to an even higher rate of interest is - no disrespect intended - absolutely bonkers.

The way forward is, as previous posters have pointed out, to knuckle down and throw every spare penny you can at the debt, prioritising the highest-rate debt first.

If you feel so inclined, complete an SOA and post it up.  You'll receive plenty of helpful suggestions as to where you may be able to make savings in your expenditure, allowing you to throw more at the debts and clear them more quickly.

blondeyk89

Grumpelstiltskin said:

' I will keep one for emergencies'  That is the beginning of the slippery slope back into even more debt.

Can't you see all you would be doing is moving the existing debt sideways into an even higher interest rate.

Can you explain how that is the best way forward?

I certainly wasn't saying it was the best way forward. I came here to guage options. 

blondeyk89

MattMattMattUK said:

blondeyk89 said:

Hi

I have 3k credit card debt. 
Three different cards different interest rates, 30.4%, 39.9% and 30%

According to clear score I could be eligible for a loan which would be enough to pay these cards off (rate 39.95%)

Would you do this? 

I want to be rid of the cards. I can cut 2 of them and keep 1 for absolute emergencies! 

Then that would mean rather than having the different providers to pay each month it's just one payment of £173 for 2 years (potential to pay quicker). 

Or just keep chipping away at each card?

You are going to move your debts from 30.0% and 30.4% to a higher interest rate of 39.95%, that is an absolutely awful idea!

You should be paying the maximum amount you can on the card with the highest interest rate until it is cleared. That means cutting back on all non-essentials to clear the debt. 

blondeyk89 said:

PropertySense said:

That American dude (What's his name?) with the balloon popping had a great system:  work the smallest one into non-existence and then move the payments made on the smallest debt onto the next smallest until that is gone.  Then, once that is gone, place all your payments onto the last one.  Of course you still need to maintain min payments on the 2 larger one... Dave Ramsey... that was the American guy!

Thank you. They are all similar so I guess start with the one with the highest interest rate.

Do not start by moving your debt to an even higher interest rate, that is a huge step backwards, not forwards. 

If you are struggling with budgeting then post an SOA on so people can look help you with budgeting. 

https://www.lemonfool.co.uk/financecalculators/soa.php

Sure, this is what I am going to do 

Thank you 

blondeyk89

ChampagneSupernova36 said:

Hey @blondeyk89

I was in a similar situation in 2021 with 6 credit cards and was enticed into a loan of £4k. This cleared all of my credit cards and I then had one monthly payment, and a much smaller one at that. The APR was about the same as yours and I owed nearly £8k on the loan with it all added together , I then maxed out all cards again and ended up in an even worse situation than I was before.

unless you can really  trust yourself with those emergencies , don’t do it !!! 

Thank you for sharing your own experience. 
I am not going im to do it and just chip away slowly. Thank you