Debt Advice - Credit Cards

Hamiltonc

I have various credit cards - some are 0% and some aren't.  We're looking to move house next year and following calculators for mortgage borrowing, it seems some lenders may still lend - however, due to the number of credit cards (known as credit lines) the number of different credit lines I have may impact ability to get an accepted full mortgage offer

What's the best and easiest thing to do here - is it best to aim for a long term loan for debt consolidation as that'll reduce the number of credit lines and into one monthly payment?  

Or do I do the snow ball effect, and just make minimum payment or just over that per card, but starting with smallest balance, going from small to high, get each one in turn to £0?

Useful advice would be appreciated 

fatbelly

I wouldn't use a loan as you are then fixed into an interest rate for a long time.

Use 0% balance transfer offers to get as much of your debt to 0% and snowball the rest

RAS

Post up a list of your debts, value, monthly payment and APR plus end dates of existing deals.

And a list 0% deals you can get. It may be possible to balance transfer several small debts into one new card. Then close some of the old cards?  

Hamiltonc

Yeah looking to do this - it's just will mortgage underwriters refuse instantly because of too many cards or not quite?

CliveOfIndia

A consolidation loan is not a good idea.  One reason being, you may struggle to get a decent APR.  Since a lender cannot force you to use the loan to repay existing debt, they have to take the view that the loan would be in addition to - not instead of - your existing debt, and will price the loan accordingly.

Also, the number of credit lines available to you does have a small impact on a lender's assessment.  But of far greater importance is the overall level of debt, irrespective of where it's sitting.  So shifting it all to a single loan will have a miniscule effect on your mortgage application.

The best approach you can take is to pay down the debt before making the mortgage application.

Hamiltonc said:

just make minimum payment or just over that per card, but starting with smallest balance, going from small to high, get each one in turn to £0?

You're better off to throw everything you can to the most expensive debt whilst making minimum payments plus a fiver to all the others.  This will save you the most in terms of interest overall - and as I said, lenders don't care where the debt is sitting, they just care about how much debt you've got overall.

The reason I'd advise paying slightly more than the minimum is because of the effect on your credit history.  On an interest-bearing credit card, if you only pay the minimum then this is shown on your credit history, and can be interpreted as a sign of financial hardship.  Pay a few quid more than the minimum, and you don't the flags on your record.

It's less of an issue if you're on a 0% promotional rate.  This will be noted as such on your credit record, so paying only the minimum is pretty much expected behaviour, and is not such an issue.

Although, of course, the usual caveat applies with any 0% card - don't bank on being able to do another BT when the promotional rate expires.  If you can BT again then great, but it's never wise to just assume that you'll be able to do so.

Hamiltonc

Thank you 

Hamiltonc

Here is my list - n/a means there isno promo rate, it's in order of balance 

sourcrates

Original thread has been moved to this board, so this is a duplicate.