CC Debt advice ?.

-1-

Sorry if this is in the wrong place, please move if it is.

Got a mate that is looking for advice on her CC debt.

She has a Halifax CC (not sure which or the %) with a £7,000 balance (£14,000 credit limit) on it.

She has just got her last statement and the minimum payment is £158 & next months estimated interest is £95 odd.

She works part time and only has maybe £300 a month wage and pays just above the minimum (I mean just, £160 on her last statement).

I haven't got a clue about CC's so i'm looking for advice from you experts to pass on.

Obviously ( I think) there is no way to just right off the debt, but what are the best options to either pay less per month, or a quicker way to pay off the balance then she currently is, would a balance transfer to a better rate CC work for her etc... ?.

She is getting a bit worked up and although £7k isn't alot to some to be in debt by, on her wage it's like she's going nowhere fast.

She has no savings either, & lives with her parents.

Thanks.

CLAPTON

She needs to know the APR on the CC but its probably about 19% APR

And it seems likely that the minimum monthly payment is 2% per month

If her credit rating is good she might just get a lower APR CC to BT to ... maybe a life of balance card would be best. Look up Martins CC article for the current deals.

However, this won't reduce her monthly outgoings (or may indeed increase it) as she will still have to pay the minimim monthly amount although she will pay the debt off quicker(minimum payments are typically 2- 3% of the balance but varies)

Why is her income so low... the obvious solution is to raise her income and pay more off against the debt

CannyJock

I've got a Halifax card, min repayment is 2%, so £ 158 min repayment would put her balance at £ 7,900. That's over 200% of her annual income?

She seriously need to get that onto a 0% card, problem will be getting accepted for one. Would recommend the Virgin Money card, 0% for 15 months. They'll charge a 2.98% BT fee, which on £7,900 would be £ 235, putting her balance up to £ 8135. First minimum payment would be £ 244, followed by further minimums of £ 25 per month for 14 months. This should help reduce the interest she pays (assuming she's accepted of course).

Any amount she can move onto lower APR will save her in the long run.

If she's able to clear the Halifax card, I'd be tempted to hold onto it for now (if she spends on it then she's mad) for when the 0% deals are nearly up, and ask Halifax for a deal to move the debt back to them. Good article on it at: http://www.makesenseofmoney.co.uk/a_extend.html

With a bit of luck she'll be able to play the card companies against each other and bounce the debt around at 0% and only the BT fees to pay.

Might make depressing reading, but show her the minimum repayment calculator at http://www.moneysavingexpert.com/cards/minimum-repayments-credit-card#calc and the effect of increasing the "min pounds"

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Thanks for that, i'll print this out and pass it on.

TBH I think she was hoping for a quick fix answer but there isn't one is there.

Hopefully she'll get accepted for the Virgin card.

Answer to the first reply, she runs a "small (very small) business" from home making patch work and some greetings cards that she sells online and at local markets, hence the low income, also it's not a guaranteed income ofcourse, which doesn't help.

PROLIANT

Sorry to p**s on everyone’s fire here, but why has she ran up debts she cannot afford to repay? If she is going to live beyond her means then she is asking for bother!

Scousebird_2

PROLIANT wrote: »

Sorry to p**s on everyone’s fire here, but why has she ran up debts she cannot afford to repay? If she is going to live beyond her means then she is asking for bother!

That's harsh! I know you are being realistic, and I can't talk because I did the same, but to be fair, my debt was taken out for furnishing a home when I had absolutely nothing and needed to sort my life out rarther than living hand to mouth-I don't suppose we know the circumstances of why she run up the debt so be gentle dearest!!

Although credit where it's due for being honest!!

mogwai

PROLIANT wrote: »

Sorry to p**s on everyone’s fire here, but why has she ran up debts she cannot afford to repay? If she is going to live beyond her means then she is asking for bother!

No one was asking for your judgement or your 'honesty'. Just answer the OPs question. If you can't - why post? I'm sure OP or her friend are not interested in the personal opinion of some random bloke off the net, who knows next to nothing about them.

MABLE

PROLIANT wrote: »

Sorry to p**s on everyone’s fire here, but why has she ran up debts she cannot afford to repay? If she is going to live beyond her means then she is asking for bother!

Never a truer statement made. I am somewhat amazed how on earth the person got a credit limit of £14,000 in the first place. Perhaps she has fabricated her income.

PROLIANT

mogwai wrote: »

No one was asking for your judgement or your 'honesty'. Just answer the OPs question. If you can't - why post? I'm sure OP or her friend are not interested in the personal opinion of some random bloke off the net, who knows next to nothing about them.

And your point is?

PROLIANT

I am not passing judgment on anybody, come on its just common sense, ok so you have a CC with £14K limit, all you need is a calculator and a pen and paper and some basic arithmetic skills, you can work out to the nearest few quid what you will be repaying, I work full time and out of my £1143 monthly income £1020 goes on bills and living etc, I have a £500 limit on my CC and work out what i can afford to spend, I live by the cut of my cloth, I cant afford £158 per month on extra debt, so I stand by my original post because it is valid and is not nasty or judgmental in anyway, sorry if I have offended anyone, but I think it would be fair to say that my statement was honest and factual.

skintstudent84

PROLIANT wrote: »

I am not passing judgment on anybody, come on its just common sense, ok so you have a CC with £14K limit, all you need is a calculator and a pen and paper and some basic arithmetic skills, you can work out to the nearest few quid what you will be repaying, I work full time and out of my £1143 monthly income £1020 goes on bills and living etc, I have a £500 limit on my CC and work out what i can afford to spend, I live by the cut of my cloth, I cant afford £158 per month on extra debt, so I stand by my original post because it is valid and is not nasty or judgmental in anyway, sorry if I have offended anyone, but I think it would be fair to say that my statement was honest and factual.

You claim to not be passing judgement, but that is exactly what you are doing. Until you no the ins and outs of the OP's friends life you have no idea how this debt occurred or why. She has made a mistake. I'm sure you've made plenty in your time too, just maybe not financially.

We all make mistakes and admitting them is the first step in rectifying them- having someone point and laugh and call you an idiot for making the mistake in the first place is neither helpful nor productive.

I lack common sense when it comes to financial situations, always have done. I am learning slowly and getting better but I'm certainly not stupid as you seem to be making out that those with CC debts are. Where I lack common sense in one area I'm sure I make up for it in another, so less of the judgement please.