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Opinions on consolidation loan

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Hiya, I'm looking for opinions on if a debt consolidation loan would be worth it - I've been pre-approved through MSE loan calculator for an 11% APR loan that would cover all my CC debt - which totals £4000 - and it would drop my monthly payments from £250 to £130 over 3 years

I have 2x credit cards (£2800 and £700), and monzo flex (£500) - the largest was originally a balance transfer so was interest free however this has recently expired
I debated doing another balance transfer - but I would need to transfer both the £2800 and £700 so 2x fees, and flex cannot be balance transferred so I'd still have this seperate
The other alternative I have - I have £500 saved that I planned to add to my existing lifetime isa for buying a house in the future, but I'm wondering if it's worth just taking that out the pot it's currently in, using that on monzo flex so it's gone, then balance tranferring the credit cards to a new 0% card (and closing the highest interest current one, keeping one open for emergencies only) - because this needs to be sorted before I'm looking at buying anyway, i've just been more holding it for getting the interest, and knowing i at least have that security of that money just in case (it is the only savings i have other than money put away for my car mot/service/potential isuses etc) - doing this would also drop my monthly payments to £100-150 depending on what I could pay that month


Can anyone give any advice on this? Am I best taking the loan out, or using my 'house' savings to pay off monzo flex, and balance transferring the rest and just incurring the fees

Comments

  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,473 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Keeping 1 credit card open for emergencies is the beginning of a slippery slope to further debt.

    Whatever you decide start saving another fund for emergencies and cancel all credit cards.
    If you go down to the woods today you better not go alone.
  • sourcrates
    sourcrates Posts: 31,573 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    edited 21 July at 6:40PM
    We are not really fans of consolidation on these boards, people tend to go to great lengths explaining how much better off they will be, and how much income they can free up if they were to get these loans, but then fail to change their destructive financial behaviour that got them into debt in the first place, and usually they end up back in hock to the bank, but with twice the debt they had previously, we tend to see it a lot on here unfortunately.

    Some who failed the first time, even go back and do it again, sometimes they do it more than twice.
    Eventually they come around to the conclusion, most on this board arrived at a long time ago, which is you can`t borrow your way out of debt.

    Best advice for emergencies, is that they should be covered by regular savings from your budget, not some banks piece of plastic.

    Sorry if this is not what you want to hear.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it 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.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • DullGreyGuy
    DullGreyGuy Posts: 18,613 Forumite
    10,000 Posts Second Anniversary Name Dropper
    Hiya, I'm looking for opinions on if a debt consolidation loan would be worth it - I've been pre-approved through MSE loan calculator for an 11% APR loan that would cover all my CC debt - which totals £4000 - and it would drop my monthly payments from £250 to £130 over 3 years

    I have 2x credit cards (£2800 and £700), and monzo flex (£500) - the largest was originally a balance transfer so was interest free however this has recently expired
    I debated doing another balance transfer - but I would need to transfer both the £2800 and £700 so 2x fees, and flex cannot be balance transferred so I'd still have this seperate
    The other alternative I have - I have £500 saved that I planned to add to my existing lifetime isa for buying a house in the future, but I'm wondering if it's worth just taking that out the pot it's currently in, using that on monzo flex so it's gone, then balance tranferring the credit cards to a new 0% card (and closing the highest interest current one, keeping one open for emergencies only) - because this needs to be sorted before I'm looking at buying anyway, i've just been more holding it for getting the interest, and knowing i at least have that security of that money just in case (it is the only savings i have other than money put away for my car mot/service/potential isuses etc) - doing this would also drop my monthly payments to £100-150 depending on what I could pay that month


    Can anyone give any advice on this? Am I best taking the loan out, or using my 'house' savings to pay off monzo flex, and balance transferring the rest and just incurring the fees
    BT fees are just a percentage of the debt being transferred so doesnt make any difference if its £2,800 and £700 or a single debt of £3,500 the 3% fee will be the same either way. A Money Transfer card, or one with BT and MT would be able to deal with the non-credit card debt. 
  • fatbelly
    fatbelly Posts: 22,979 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    The 11% apr loan is a bad idea, so go with the other plan.

  • Scarlet_to_Black
    Scarlet_to_Black Posts: 84 Forumite
    10 Posts Name Dropper
    edited 21 July at 6:44PM
    We are not really fans of consolidation on these boards, people tend to go to great lengths explaining how much better off they will be, and how much income they can free up if they were to get these loans, but then fail to change their destructive financial behaviour that got them into debt in the first place, and usually they end up back in hock to the bank, but with twice the debt they had previously, we tend to see it a lot on here unfortunately.

    Some who failed the first time, even go back and do it again, sometimes they do it more than twice.
    Eventually they come around to the conclusion, most on this board arrived at a long time ago, which is you can`t borrow your way out of debt.

    Best advice for emergencies, is that they should be covered by regular savings from your budget, not some banks piece of plastic.

    Sorry if this is not what you want to hear.
    This ☝️ Twice 🙋🏼‍♀️ £42k later…🤦‍♀️
  • ManyWays
    ManyWays Posts: 1,352 Forumite
    1,000 Posts Fifth Anniversary Name Dropper
    I would need to transfer both the £2800 and £700 so 2x fees
    I dont think that is right, you are charged the fee on the amount you transfer by the card you are moving to. So the fees on 2800 + 700 would add up to the same as on one transfer of 3500
  • lotrxdippy
    lotrxdippy Posts: 2 Newbie
    First Post
    Thanks everyone for your help.  Think I'm gonna go the BT way, I've obviously misunderstood how the fees work, and use the savings on flex so as much as savings will be gone, a chunks paid off and will allow me to save again 
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