Advice needed please

azalia_2

I hope that this is the right forum or thread to put this in, I am new to such things, so please forgive me if I have the wrong place.

My husband and I have two credit cards, a bank loan for a car needed for the 30 mile trip to work for my husband, and various other financial responsibilities such as utilities, rent and monthly fee's for computers and sky etc etc. All in all we have transfered into our bills account each thursday the sum of £210. And have always paid everything on time, and sometimes paid more than necessary, such as the credit cards.

About 6 weeks ago, one of our credit card companies increased the interest rate from 24% to 34%. an increase of nearly 42%. Despite reducing areas of our bills account such as pet insurance and other things, and faithfully continuing to pay the fixed direct debit amount we now find that we are seriously struggling to pay the monthly interest charges. It has become a critical situation for us. Speaking to the credit card company this morning about this, they basically told us that they would like a 'run down' of all our credit and debit and utility fee's etc, in order to assess what can be resolved here.

Obviously, their idea is that we pay a fixed sum to all our creditors, which basically means that they want us to go into debt with everyone, when we have never done so before, and can manage fairly well to pay these others things. We have assured them that we will keep on paying the fixed rate for the credit card by direct debit, which we have never defaulted on, (and incidently have had with them for years) but they want more. What can we do? We do not want to go into debt with everyone, and we would like to keep our other creditors, including the other credit card up to date, and our credit reference good, as it always has been in the past.

Sorry that this post has been so long and involved.

CannyJock

The increase from 24% to 34% sounds steep to me.

If you were able to apply for a 0% balance transfer card then you'd be able to buy yourself some breathing space to clear this without paying interest every month.

Might be worth a try - I'd say the Virgin Money card would be a good one if you qualified for it, you pay a one-off fee of 2.98%, the first payment is 3% and the next 14 minimum payments are £ 25. Then it shoots up to standard interest rates again.

You say credit cards plural, what other cards you got and what sort of balances and APR?

GeorgeUK

Post up a SOA on the Debt Free Wannabe board and we'll see if there are any savings to be made.

Check the Experian website and see your credit report (free if you cancel within 30 days). Check how many credit checks have been done in the last 6 months. 3 is usually ok before it starts to impact your credit score.

I would avoid getting a loan or anything until you've looked at all other options.

azalia_2

CannyJock, thank you for your reply.

There is no question of us applying for another credit card; we only have the two credits cards, in our joint names, and cannot afford to get another one, however enticing the inducements sound. And besides that, I doubt that we would be granted one, since we know ourselves that we are at our limit, and couldn't lie to anyone, it is simply not us. The other thing is that we have no collaterol, we live in a council flat, we don't own, unfortunately.

The credit card in question is quite high, and we continue to pay the fixed rate of £50 in direct debit payments, and intend to keep that up whatever happens about the interest default.

azalia_2

Thank you for your reply and info GeorgeUK.

I agree, your advice is sound, we do not want to apply for any other loans, and will not do so.

Basically, I posted because I am not sure if the credit card company in question can legally force us to go into debt with our other creditors, which we are not at the moment in debt to, nor likely to be.

Bokkens

azalia wrote: »

, and faithfully continuing to pay the fixed direct debit amount we now find that we are seriously struggling to pay the monthly interest charges. It has become a critical situation for us. Speaking to the credit card company this morning about this, they basically told us that they would like a 'run down' of all our credit and debit and utility fee's etc, in order to assess what can be resolved here.

.

It seem very obvious to me that you need some support here.
Although the advice offered is good you will need someone to help you review your bills and outgoings this can be done online with the debt free wannabes forum but the Citizen's Advice Bureau is the place you should start with.
Take your paperwork along to them and discuss the high APR they can work out your payments and negotciate with the card company on your behalf.

"faithfully continuing to pay the fixed direct debit amount we now find that we are seriously struggling to pay the monthly interest charges".
This is the bit I don't like "Faithfully"and Martin doen't like it either you cannot afford in this day and age to be faithful to a large credit card company you must move to a cheaper one and so reduce your debts and the CAB will help you acheive that.
Good luck and go to the CAB .

NickX

azalia wrote: »

CannyJock, thank you for your reply.

There is no question of us applying for another credit card; we only have the two credits cards, in our joint names, and cannot afford to get another one, however enticing the inducements sound. And besides that, I doubt that we would be granted one, since we know ourselves that we are at our limit, and couldn't lie to anyone, it is simply not us. The other thing is that we have no collaterol, we live in a council flat, we don't own, unfortunately.

The credit card in question is quite high, and we continue to pay the fixed rate of £50 in direct debit payments, and intend to keep that up whatever happens about the interest default.

I think you are being very naive here. CannyJock was quite right, the Credit Card company are charging you too much. Do not give any loyality to them, move away to another card that charges less interest, preferably 0% for an initial period.

I don't think CannyJock was suggesting that you take on more debt, just that you move the existing debt to a lower rate - and I agree with him.

Also don't worry about the fact you do not own a property, Credit Card Debt is UNSECURED and it makes little difference if you own a property or not. The key here is to get the APR's down. Good Luck.

NickX

azalia wrote: »

Basically, I posted because I am not sure if the credit card company in question can legally force us to go into debt with our other creditors, which we are not at the moment in debt to, nor likely to be.

Right, I don't mean to sound harsh, but you need to understand that the Banks do not operate in your interests, they operate in THEIR interests.

The Bank has no right to get involved with any other creditors that you may have, it is not their business. Only negotiate with them on the debts with them.

I think you are best to speak to CAB who can assess your overall financial situation and will act in your best interests. They will help get your finances in order, and will negotiate with individual creditors.

azalia_2

No no NickX, you do not sound harsh at all, and indeed you are quite correct, we are very naive when it comes to things like this. We are very grateful for everyone's advice here, and thank you all.

But, people keep saying to change our credit card to another one, and we are completely mystified by this advice. Who on earth would give us another credit card when we are already at our limit on this one? Surely everyone would turn us down, wouldn't they?

NickX

From what you have said, you have not yet defaulted the Credit Card, you just struggling with the completely unfair hike in interest rate that this company has imposed on you.

Provided you haven't defaulted I don't see why another Company would not consider you, and even if you have its worth a try as different companies report to different Credit Reference agencies. The other day I was advising someone who had late payments and was strugglying, she got a new card with a £4700 limit. Until you put an application in, you don't know.

Basically there are some very good introductory deals out there - for example up to 15 months at 0% interest and they will Transfer your existing balance over. There will be a Balance Transfer fee of around 3% but this is nothing compared to the savings you will make on the interest you currently paying. If you read Martin's Best Balance Transfer article it has lots of suggestions. I feel that your existing company have just hiked your rate as a sheer profitering exercise and you should move your business elsewhere.

azalia_2

Thank you NickX. We will try that suggestion of transfering our credit card. And also, we will certainly take on board everyone's suggestion to go to the CAB, where someone here said that they would be able to help us to attain a transfer.

Once again, thank you to everyone that replied here, we are so grateful.