Best way to consolidate a loan and credit card into one payment?

CEB011

Hello all,

Pretty much as the title says, I've got a loan and credit card debt I'm repaying. I'm wanting to consolidate these into 1 payment. I was looking at 0% balance transfers, but I understand that you can use them on a loan.

I'm wondering what my options are?

fatbelly

Not sure why you'd want to do that.

Yes you can explore transferring your credit card balance to a 0% BT card

You could look at a money transfer card to move cash at 0% to your bank, and pay off the loan.

However, the devil is in the detail here. You would need to pay off the card within the 0% period, or do yet another 0% bt transfer. If you don't have a good level of surplus income, eventually this sort of juggling catches up with you, and you may be better doing debt management sooner rather than later 

CEB011

fatbelly said:

Not sure why you'd want to do that.

Yes you can explore transferring your credit card balance to a 0% BT card

You could look at a money transfer card to move cash at 0% to your bank, and pay off the loan.

However, the devil is in the detail here. You would need to pay off the card within the 0% period, or do yet another 0% bt transfer. If you don't have a good level of surplus income, eventually this sort of juggling catches up with you, and you may be better doing debt management sooner rather than later 

Why wouldn't I want to consolidate my payments into 1 payment instead of two. I'm not sure I understand why consolidating would be a bad thing?

EssexHebridean

So the majority of people consolidate because they are struggling to afford payments - and they do it to reduce th4 amount they pay out each month. The issue is that those same people also don't do the "homework" in the background to realise why the debts occurred in the first place, and around learning to budget to live without credit going forwards. That in turn means habits don't change, and so they end up in more debt, before consolidating again...and that cycle repeats. Gradually the payments get bigger and the terms get longer, and eventually the whole house of cards comes tumbling down when they realise they can no longer get credit at any sort of an affordable level.

Consolidation is kicking the can down the road - better by far to do the homework and work on clearing the debts. By all means transfer the CC debt to a 0% card, calculate what your monthly payments need to be to clear that card by the end of the 0% period, set those payments, shred the card, and get it cleared. In the meantime, budget for any spare income over and above those payments to go into an interest paying savings account ready to clear the loan early - if allowed. 

CEB011

EssexHebridean said:

So the majority of people consolidate because they are struggling to afford payments - and they do it to reduce th4 amount they pay out each month. The issue is that those same people also don't do the "homework" in the background to realise why the debts occurred in the first place, and around learning to budget to live without credit going forwards. That in turn means habits don't change, and so they end up in more debt, before consolidating again...and that cycle repeats. Gradually the payments get bigger and the terms get longer, and eventually the whole house of cards comes tumbling down when they realise they can no longer get credit at any sort of an affordable level.

Consolidation is kicking the can down the road - better by far to do the homework and work on clearing the debts. By all means transfer the CC debt to a 0% card, calculate what your monthly payments need to be to clear that card by the end of the 0% period, set those payments, shred the card, and get it cleared. In the meantime, budget for any spare income over and above those payments to go into an interest paying savings account ready to clear the loan early - if allowed. 

I really appreciate this information as it's super helpful thank you! 

I'm not struggling to lay the debts at all. My thinking was to make it more effective and lower the interest across the two to pay them off. My loan will let me pay early without any penalty. 

So I'm better off moving the credit card to a 0% balance transfer on a shorter term 

And the loan just keep over paying?