2 x Visa cards, £6,788 debt

jamesisaburyfan

I have two Visa credit cards with debt totalling £6,788.

The first is a Halifax Visa Credit, on which I owe £3209.14. It has Purchase, Cash and Balance Transfer rates of 23.84%. I have one monthly subscription on it that costs less than a tenner but I do try and use this cards for occasional work train fares (less than £20) which I then claim back.

The second is a Jaja Visa Credit with £3,579.02 owed. It has a purchase rate of 34%, a cash rate of 43% and a Balance Transfer rate of 34%. I have another subscription linked to this card that again is less than a tenner.

I'm currently spending around £300-350 a month trying to clear then but because of the interest feel I'm taking two steps forward and three steps back.

What would be my best way to deal with this? I'm currently being bombarded with social media ads for consolidating loans but would like to continue keeping the Halifax card. Please describe iany solution to me like I'm five years old.

retiredbanker1

What does your credit files show about you?

Any other debts or missed payments?

You could try to get a balance transfer card to cover some or all of the debts - but you should have a plan to clear this over any promotional period.

jamesisaburyfan

My credit record on Transunion is actually Excellent. I never miss any payments on any of my main things like mortgage, council tax, credit card payment dates.

Brie

My first thought - Move your Jaja subscription to the Halifax card. Pay the minimum on the Halifax and the max you can afford on the Jaja as it has higher interest. Don't use the Jaja for anything at all until it is cleared.

Do you have to use the Halifax card for the train fares? Everything that goes on that (including subscriptions) is being charged interest from day one as you haven't cleared the balance. Try to stop using it for anything else if possible. In fact if you can find another way to pay both subscriptions other than using the card that would be best - you say they are both under a tenner but that £10 is costing you at least £12 when you consider the interest being charged.

Can you get another card to do a 0% balance transfer? If so do that and clear the Jaja card or as much of it as possible.

—

Ok so for the math…..

Assuming you are required to pay 3% of your outstanding balance each month and you're being charged about £63 interest on the Halifax card your minimum payment is about £96. So you are clearing that down slowly. If you continue to just pay the minimum after 2 years this balance will be about £2460 assuming you don't use the card for any purchases whatsoever.

Same assumption for Jaja of 3% but here you're being charged about £101 a month interest but the minimum is £107 so you're hardly making a dent at all. That's why you need to throw as much at this as possible. Kept as things are and paying the minimum after 2 years this balance will be about £3433 - so hardly changed at all.

Now if you set the Halifax DD to a specific amount (much easier to manage in my opinion) of £96 every month after 2 years the balance will be down to £2178.

And if you set the Jaja DD to £107 after 2 years the balance will be £3379 - better but not great. But if you have £300 a month in total to put on the cards this means you have £97 that you can throw at this too (£300-107-96=£97). So assuming you pay this extra £97 on the Jaja card your balance will be paid off in less than 2 years. At which point you can do a happy dance and then start paying the entire £300 on the Halifax.

Hope that all makes sense.

Isthisforreal99

First things first, stop any further spending on both cards. It's a ludicrous thing to do when the interest rates are so high and you aren't clearing the balance.

Why do you feel the need to keep the Halifax card.

As above, try and get a 0% balance transfer card.

eschaton

Do as above and definitely stop spending on both cards. Continuing to spend with such rates is contributing towards your backward steps.

Do BT’s if possible, if not make minimum payments to the lowest rate card and every other penny towards the higher rate card.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6675281/2-x-visa-cards-6-788-debt

Taking a consolidation loan doesnt preclude you from keeping the credit cards however that is a very slippery slope as this site is full of people who consolidated credit card debt into a loan and then ran up new credit card debt.

You may be better off doing over to the debt free wannabes section on the site and they can review your spending and recommend methods to free up more cash to pay off the debt quicker and therefore avoid interest

eskbanker

I'm currently spending around £300-350 a month trying to clear then but because of the interest feel I'm taking two steps forward and three steps back.

A minor point in the overall scheme of things but important to understand that you are making progress in repaying the debt, in that minimum monthly repayments always include a component of capital repayment as well as settling outstanding interest, so you're taking three steps forward and two backward, rather than the other way round. However, if you're continuing to spend on the cards as well, then naturally that'll distort that position…

caffeinated_human

Stop new spending on the cards, target the higher-interest card first, and consider 0% balance transfer if eligible.

Stuart_W

Those are very high rates, use a cc eligibility checker, such as the MSE one, to see what's available to you.

Even if you can't get 0% you can probably save money by getting something at least a bit better. A friend recently got Co-op's 8.9% fee free balance transfer card, the rate lasts for three years. It is by no means a market leader but saves them hundreds over what they were paying.

If you can't get accepted for any new cards there may be mileage in transferring jaja debt onto the Halifax one if you have space. Use a credit card calculator to work it out.

But do stop all new spending on both. If you need one for claiming expenses back, you'll probably be accepted for an awful third one at 49% which you pay off in full each month so the rate is irrelevant.

Sam_54

https://forums.moneysavingexpert.com/discussion/6675281/2-x-visa-cards-6-788-debt

It sounds like the biggest issue isn't that you're not paying enough—it's that the interest rates are so high that they're eating into your repayments. Have you looked into whether you qualify for a 0% balance transfer card or spoken to a debt adviser about your options? Once you've got the debt under control, that's usually a much stronger position to start thinking about long-term investing and building wealth.