Please help well-meaning idiot (me) shake off longstanding irritating credit card debt.


Hello MSE.
Long-time ‘financially incompetent’, first time ‘actively taking steps to ensure the preservation of my future’ here.
Attempted to lay out my financial landscape below – if there’s anything I’ve missed out, or any extraneous information, please let me know and I’ll edit/update the post accordingly.
HEADLINES:
I’m self-employed, and horrendously financially disorganised. Due to Covid/lockdown/bounce back loans, I’ve been on the back foot for some years.
I’ve got around £10k of credit card debt across 5 cards.
I’m looking to establish a sensible, low-interest (or no-interest) means of paying off the debt, whilst ALSO developing a sustainable idiot-proof method of AUTOMATICALLY saving money for my tax bill in the future, so that I NEVER tumble backwards into this panic-sodden, sleep-annihilating pattern ever again.
CREDIT CARD DEBT:
I've listed each credit card here, with the interest rate info pasted below. (Apologies if I've pasted too much info - it's only because I genuinely don't know what I should be looking out for.)
MBNA #1 - £2367.39
[Your current standard interest rates are: 34.54% p.a. (variable) for Cash Transactions (Effective rate) 34.54% p.a. (variable) for Purchases (Effective rate) 34.54% p.a. (variable) for Balance Transfers (Effective rate) 34.54% p.a. (variable) for Money Transfers (Effective rate) 30.0356% p.a. (variable) for Default charges (Simple rate)]
Monthly DD: £89.26 |
MBNA #2 - £1,309.97
[Your current standard interest rates are: 27.94% p.a. (variable) for Cash Transactions (Effective rate) 27.94% p.a. (variable) for Purchases (Effective rate) 27.94% p.a. (variable) for Balance Transfers (Effective rate) 27.94% p.a. (variable) for Money Transfers (Effective rate) 24.8940% p.a. (variable) for Default charges (Simple rate)]
Monthly DD: £60.13
HALIFAX - £1,098.33
[Your current standard interest rates are: 26.83% p.a. (variable) for Cash Transactions (Effective rate) 26.83% p.a. (variable) for Purchases (Effective rate) 26.83% p.a. (variable) for Balance Transfers and Money Transfers (Effective rate) 24.0040% p.a. (variable) for Default charges (Simple rate)]
Monthly DD: £28.16
AMEX – £4,994.75
[Rates of Interest:
Goods And Services - Compound Annual Rate 31.0%, Simple Monthly Rate 2.28%
Cash Advance - Compound Annual Rate 38.3%, Simple Monthly Rate 2.74%
Balance Transfer - Compound Annual Rate 31.0%, Simple Monthly Rate 2.28%]
Monthly DD: £237.86
LLOYDS – £320.87
[Your current standard interest rates are: 30.98% p.a. (variable) for Cash Transactions (Effective rate) 30.98% p.a. (variable) for Purchases (Effective rate) 30.98% p.a. (variable) for Balance Transfers and Money Transfers (Effective rate) 27.2960% p.a. (variable) for Default charges (Simple rate)]
Monthly DD: £9.88
OTHER DEBTS:
Student Loan: £14,602.31
MORTGAGE (with NATWEST) on a Help to Buy property: Monthly DD: £638.98
Bounce Back Loan: £6.5k
Monthly DD: £122.45 per month.
CREDIT SCORE:
(Does anyone care about this?)
611 / 710 according to “CreditKarma”
MY CURRENT ACCOUNT/SAVINGS ACCOUNT IS WITH LLOYDS
DESIRED OUTCOME:
To reiterate, I’d like to:
- Re-arrange my credit card/banking situation so I am on as close to 0% interest as possible, and consistently paying off my debts. I don’t need to steamroller towards £0 of debt in the next six months or anything, I’m more interested in a sustainable long-term approach which means I’m not haemorrhaging money on needless interest payments, because I’m too terrified to look my credit card situation head-on (as I’m sure has been the case).
- The Amex feels like the biggest thorn in my side, so exceptionally clean to stop that one hitting so hard each month, but am generally keen to get to a clean slate with all the cards.
- Ideally pay no more per month than I am now – but in a more effective, efficient manner.
- Ensure I am automatically saving sufficient money from my income that I always, always have enough for any relevant tax bill. I would love this process to be automated, and to effectively not be able to see/have access to the money that is reserved for my taxes.
I’M KEEN TO AVOID:
- Anything that will torpedo my credit rating/leave a black mark on my credit history.
Over to the kind, knowledgeable experts of MSE.
Thanks in advance for your time and wisdom – it’s hugely appreciated.
Comments
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Have you checked whether you can get 0% balance transfer deals?
https://www.moneysavingexpert.com/eligibility/credit-cards/search/?goal=CC_BALTRANSFERV2
Can you pay more than the contractual minimum on these cards?
0 -
As fatbelly asks, are you able to make the contractual payments each month?
Since you are self-employed, do you have any sort of budgeting account that you can use to even the keel if you are sick or are in holiday that month? Or have you been using credit cards?
And do you rigorously separate your business and personal finances? Or do you use the personal cards to cover business bills?
And have you got the account set up into which your tax money goes each time you invoice, or at the very least at the end of each billing period when you know roughly how much profit you made? And a bit for NI contributions?
There's no way from your list to know whether you need a bit of debt planning, or are in financial crisis?
Do you have
any cash advances on the Amex card?
any spare capacity on the Halifax card (what's the limit)?
can you be motivated to develop financial nouse if it gets you out of the hole?
And do a soft check to see if there are any balance transfer available.If you've have not made a mistake, you've made nothing0 -
I'm not sure how much utilisation you are using in the max limit for each card, 30% is the recommended max,
that also effects your likelihood on getting a low interest balance transfer card.
and you can set up in your bank to automatically deduct money from your current account to a savings account.Christians Against Poverty solved my debt problem, when all other debt charities failed. Give them a call !! ( You don't have to be a Christian ! )
https://capuk.org/contact-us0 -
HMRC offer the facility to pay weekly or monthly in advance.0
-
Trying to make savings is commendable. But getting 5% on these while paying 35% on some of the debts doesn't make sense.
We are not going to suggest a consolidation loan. If you don't have enough money to be paying down your debts then you will need something like a dmp0 -
lifeadmintrainee said:
I’m looking to establish a sensible, low-interest (or no-interest) means of paying off the debt, whilst ALSO developing a sustainable idiot-proof method of AUTOMATICALLY saving money for my tax bill in the future, so that I NEVER tumble backwards into this panic-sodden, sleep-annihilating pattern ever again.
CREDIT CARD DEBT:
I've listed each credit card here, with the interest rate info pasted below. (Apologies if I've pasted too much info - it's only because I genuinely don't know what I should be looking out for.)
MBNA #1 - £2367.39
[Your current standard interest rates are: 34.54% p.a.
Monthly DD: £89.26 MBNA #2 - £1,309.97
[Your current standard interest rates are: 27.94% p.a.
Monthly DD: £60.13
HALIFAX - £1,098.33
[Your current standard interest rates are: 26.83% p.a.
Monthly DD: £28.16
AMEX – £4,994.75
Goods And Services - Compound Annual Rate 31.0%,
Monthly DD: £237.86
LLOYDS – £320.87
[Your current standard interest rates are: 30.98% p.a.
Monthly DD: £9.88
OTHER DEBTS:
Student Loan: £14,602.31
MORTGAGE (with NATWEST) on a Help to Buy property: Monthly DD: £638.98 Priority payment - don't miss this, ever. Even if it means not paying the CCs.
Bounce Back Loan: £6.5k
Monthly DD: £122.45 per month.
CREDIT SCORE:
(Does anyone care about this?) NO - you're the only one that sees it. It's the credit history the creditors look at.
611 / 710 according to “CreditKarma”
DESIRED OUTCOME:
To reiterate, I’d like to:
- Re-arrange my credit card/banking situation so I am on as close to 0% interest as possible
- The Amex feels like the biggest thorn in my side, so exceptionally clean to stop that one hitting so hard each month, but am generally keen to get to a clean slate with all the cards.
- Ideally pay no more per month than I am now – but in a more effective, efficient manner.
- Ensure I am automatically saving sufficient money from my income that I always, always have enough for any relevant tax bill. I would love this process to be automated, and to effectively not be able to see/have access to the money that is reserved for my taxes.
I’M KEEN TO AVOID:
- Anything that will torpedo my credit rating/leave a black mark on my credit history.
OK - so the short version
Go to the stickies at the top of the debt forum page and look for the statement of accounts (SOA), fill that out so that you have a detailed budget available. You can keep it for your own use or post it back here to get more advice from the helpful elves - they're bound to have some great ideas for you.
The long version (in case I don't see you posting the SOA)
I suggest you clear the Lloyds card, use it for all your spending and clear it in full every month so there's no interest charged on it. Best to set the DD to "clear in full" if you are confident you will always have that in your account.
I'm assuming you have listed the minimum payments expected this month for your CCs. And assuming those are the actual APRs you are being charged. So to clear things sooner rather than later you need to up your payments even just a bit.
MBNA1 seems to have the highest APR so logic says you should hit that the hardest as it's costing you the most. If you could make a payment of £200 a month on that you could clear it in a year. Once that happens MBNA are likely to offer you a 0% balance transfer deal and you might then be able to BT something against the dreaded AMEX.
Meanwhile I also suggest you set a minimum DD payment on all the cards. By this I mean something set so you know exactly how much you will be paying to each every month. So based on what you've got here I suggest MBNA2 - £60 a month, Halifax - £30, Amex - £250. Setting this means you are paying more then the minimum required which will clear things quicker and also makes your credit history look a tad better as it's not quite so obvious that you're scraping through.
So CC total payments every month become a set £540. Easy number to keep in your budget for the next 12 months. (But don't forget what's on the Lloyd's CC to be paid too.) As soon as any card becomes clear switch that amount to the Amex card.
If going to £200 on MBNA1 doesn't seem possible you might try doing £120 on MBNA2 instead and again hope for a 0% BT in about a year.
Automatic saving.....well I agree with others that saving isn't as important now compared to clearing the debt but putting money away to pay HMRC is a good idea. I like the thought of making monthly payments directly to them but you assuming you know how much your tax bill is likely to be you could set up a standing order to a savings account for a portion to be paid every month into your business savings account.
Good luck - you sound more organised than you give yourself credit for.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe and Old Style Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
"Never retract, never explain, never apologise; get things done and let them howl.” Nellie McClung2 -
Thanks Brie - much appreciated.
MSE's Credit Card Eligibility Calculator told me I was eligible for a Tesco Bank Balance Transfer Credit Card, with 0% on balance transfers for 29 months then 24.942% (variable), and a Balance transfer fee of 3.49%.
Would it make sense to apply for this?
0 -
Yes, although need a few more lettersIf you've have not made a mistake, you've made nothing0
-
Amex has just over twice the balance of MBNA 1, but a bit over two and a half times the minimum payment. This is not entirely a bad thing - it means you are being forced into paying this debt off slightly faster.As it has the highest interest rate, MBNA 1 should be your first target. But as mentioned, getting your Lloyds to zero for monthly use or for seeing if you get a balance transfer offer could also be helpful.But a banker, engaged at enormous expense,Had the whole of their cash in his care.
Lewis Carroll0 -
lifeadmintrainee said:Thanks Brie - much appreciated.
MSE's Credit Card Eligibility Calculator told me I was eligible for a Tesco Bank Balance Transfer Credit Card, with 0% on balance transfers for 29 months then 24.942% (variable), and a Balance transfer fee of 3.49%.
Would it make sense to apply for this?
Ideally, budget to pay the whole lot off within the 29 months0
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