Any possible advice...?

Ben1979_3

Hi,

I'm hoping to get some advice/assurance over my credit cards and planned solution! The low down is over the years I have put a lot of things on my flexible "friend" and now it's starting to hold me and my wife back! Below are my credit cards, I have no other loans but I do have an overdraft limit of £1,200 of which I use around £1,000 each month.

Credit Card / Amount Owed / Min. Pay / Pay / APR

Barclaycard / £7,200 / £160 / £200-225 / 21.95%
Halifax / £1,200 / £28 / £50 / 22.53%
MBNA / £14,000 (ouch) / £398 / £400-450 / 24.95%

I think all 3 cards have payment protection, Halifax was the last card I got a couple of years ago and they set my limit to £1,500 so obviously they say me as a high risk.

I always pay more than the min. amount but the payments are still increasing, especially after Christmas! I want to get my finances sorted once and for all but at the same time I appreciate it will take say 5 years to sort once and for all.

My idea is to get a loan for £9,000 to clear both my Barclaycard and Halifax. Then I will transfer the max. amount of £5,000 from my MBNA onto my Barclaycard at 6.9% APR for the life of the amount.

That would drop my debt to MBNA to £9,000 and I think reduce the monthly payments to them to around £260? I then think the £5,000 on my Barclaycard would be say £80-90. Any interest saved will go straight towards the card payments so hopefully they'll get paid off quicker as well.

I've tried working it all out but, as you probably guessed, I'm not too great with money! Loan wise, the APR is 23.9% as my credit score understandably that hot these days - over 60 months my monthly payment would be £246.85.

My net income £1,800 and I have no other loans etc but I do have a mortgage/household bills of £775 pcm and then I have fuel on top.

So I guess my questions are...

1) Am I approaching this problem in the right way?
2) Has anybody else taken this path and succeeded in reducing their credit card debts?
3) Any other suggestions/approaches, baring in mind my credit score isn't good and I want to improve my credit score so I can move house?

Appreciate any thoughts, ideas or suggestions you can come up with, thanks!

Mozette

Try posting on the debt free wannabe board?

CannyJock

Basic answer (and so save me doing lots of sums ) would be to run your debts through the snowball calculator at www.whatsthecost.com - snowball approach is to pay minimum from lowest APR debts and maximum from highest APR debt. The calculator will show you the difference.

Anything you can do on other deals, whether it's LOB, 0% periods are all good so long as you always deal with the highest APR debt first.

Have you thought about moving the debt off the Barclaycard onto the Halifax (and MBNA if necessary) card? Their CS departments may be able to increase the credit limits if you explain it's because you want to transfer a balance onto it - worth a try, they would be looking at making some interest from it after all. Trick here would be to end up with a nil balance on the Barclaycard and then move 5000 of the MBNA debt onto it, moving 5K of 24.95% debt to 5K of 6.9% debt (is there a fee for the LOB deal?). Then apply the snowball technique.

By shuffling it down you'll incur some 3% charges, but should save in the long run.

Taking out a loan with a higher APR than the debts you want to repay doesn't sound sensible to me, and that's before adding on any arrangement fees. I'd stick with the credit card approach for now and shuffle it down.

Ben1979_3

Sorry for posting in the wrong forum, I did mean to go to Debt Free, honest!

Are there any admins to move it to Debt Free section?

Thanks for the advice though - definately worth giving Halifax a call to see if they're interested or not. Thanks again...