Stuck with high interest charges

ljemann

Hi,

my husband and I are both struggling with credit card debt. We are just about managing to pay the minimum but then end up using them again for food shopping etc. 

We’ve both tried to get loans in order to pay off the debt at a more reasonable rate ( or at least have an end date in sight without more interest piling on top) we are getting turned down because of the credit card balances vs our outgoings - we have been told that we ‘can’t afford the payments’ on a loan; funny that, because we’re paying much more on the cards!!

We can’t borrow extra on the mortgage because although we only have a mortgage of 105K on a house that’s worth £280K, we have Help to Buy and when I had to come out of teaching, we did take out a secured loan with Evolution Money - not realising that they are the only company that will do a secured loan when there is HTB on the property, meaning that we can’t even shop around. 

Sorry for the long post, I just feel like I’m drowning and can’t see a way out. I don’t want to go down the route of an IVA as I’m happy to pay my debts it’s just the APRs of 30%+ that are killing us.

Thanks,

Louise

NanookOfTheNorth

Hello Louise

To avoid the interest charges on your credit cards have you looked at the interest free credit cards, usually for a fee to transfer, but then no interest charges on the amount outstanding?  There are some in link  below for around 2 years interest free.

https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards/

TadleyBaggie

ljemann said:

we are getting turned down because of the credit card balances vs our outgoings - we have been told that we ‘can’t afford the payments’ on a loan; funny that, because we’re paying much more on the cards!!

This because they don't know the loan will be used `to pay off the credit cards, and thus you will be having to service the loan and the credit card payments. 

ljemann

Unfortunately, with what we already owe, we aren’t getting accepted for anything new. 

Tried to get a loan today that would pay off 3 of my cards (the company would send direct to the providers as well so I wouldn’t even see the money) but got turned down. I pay at least £400 for these cards every months without the balances going down, but apparently I can’t afford the £245 over 5 years 🤷🏻‍♀️

ljemann

TadleyBaggie said:

ljemann said:

we are getting turned down because of the credit card balances vs our outgoings - we have been told that we ‘can’t afford the payments’ on a loan; funny that, because we’re paying much more on the cards!!

This because they don't know the loan will be used `to pay off the credit cards, and thus you will be having to service the loan and the credit card payments. 

We would be using the loan to get rid of the cards. 

Grumpelstiltskin

The loan company don't know you would use the loan to pay off the credit cards.

Even if you told them they don't know for sure you would do that.

Debt consolidation doesn't work even if you could get the loan.

tigergambit

Sounds like you may need to consider debt management. First step is to fill out a SOA so that you can see the whole picture. If you can do that and post it on here people will be able to give you constructive advice.

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions#latest

katsu

ljemann said:

Hi,

my husband and I are both struggling with credit card debt. We are just about managing to pay the minimum but then end up using them again for food shopping etc. 

Louise

Hi Louise. You'll get advice here that can help you. 

I wanted to focus on this as if you have to use credit cards every month, you aren't really managing to pay your minimum payments as you are then spending some of that money again on your food shopping etc. 

Please fill out the SOA in detail so that people can help you find ways to make savings and also to suggest options you have to deal with your debts. 

Good luck to you. There's a way ahead I promise 

sourcrates

Please, please, stop looking for loans, you need to get off the credit gravy train, and take a more realistic approach to this, that does not involve borrowing more of the banks money.

To borrow more money to consolidate, is just madness, you never get out of debt that way, its a false promise, that just keeps you in the credit game for even longer.

You are a homeowner, so an informal debt management plan is probably what`s required here.

Stop paying your unsecured, non essential credit debts, you then need a period of time to work out a plan, you need a budget you can live on, no credit, no overdraft, your disposable income is what you use for this, what you have left over once all your essential debts have been paid.

You then distribute that money between each of your creditors, how you do that is up to you.

You will also require an emergency fund, make provision for that in your budget also, you can self manage this, or go to one of the free debt charities to run it for you, but either way, put aside all thoughts of consolidation, debt management is the way forward for you here.

ljemann

I would like to point out that we are only looking at loans because of the high amount of interest we are both being charged by the credit cards. 

If we were able to get a loan that would pay off all the cards we would be looking at paying at least £600-£700 less a month which would leave us enough money to not have to rely on credit cards, with the added bonus of having an end date in sight which is laughable with the credit cards. 

I don’t know how comfortable I would be just stopping paying 😳

Thank you for all the comments though. 

RhiBi

I can understand how you feel about stopping paying, it is a scary thought and one I wasn’t comfortable with either.

i can’t give any practical advice because i am at the very start of this journey.  However, what I have learnt is that the people on here are extremely knowledgeable and have helped me and many, many others.

have a read of other threads of people on here too who have become debt free this way.  

Good luck on your debt free journey.