Should I get a loan?

sapphire12_2

I wasn't sure if I should post this here or in credit cards... so sorry if I'm in the wrong place!

I've got about £8,500 in debt on 3 credit cards.

What is the best way to pay this off - a loan or another credit card? I get so confused when I read about it on the site and try to figure it out.

Can anyone help? Thanks!

CLAPTON

what are the APRs
what are the minimum monthly payments
how much can you repay each month
is your credit rating good

sapphire12_2

Credit Card 1 - 7.92% pa
Credit Card 2 - 1.3852% monthly rate
Credit Card 3 - 1.456% monthly rate

Loan - could be between 6.8% or 7.5% depending on what I can get.

Min. payments would be under £200 and credit rating is good.

CLAPTON

and how much can you afford to pay each month (i'm assuming you have stopped spending anything on the CCs).

sapphire12_2

Yes, I've stopped spending on credit cards.

I could afford to pay £200 a month, possibly more, but wouldn't want to be fixed to paying more. Does that matter? If I had extra money at the end of the month, could I pay more towards it to get it paid off quicker?

sapphire12_2

From reading a bit on the site, it appears there are 3 options...

1) A 0% on all balance transfers credit card -

Barclaycard's* slightly shorter 0% for 14 months, with a lower 2.9% fee, and Egg's* 15 months 0% for a 3% fee.


2) A long term 'life of balance' card -

Can you repay in 2 years or under? HSBC* is offering new cardholders 2.9% on debts shifted for 2 years plus a one-off fee of 2.5 % of the balance shifted; for anyone who can repay in two years or under this is a much cheaper option.

Will it take over 4 and a half years to repay? The Citibank* Platinum iTunes Mastercard, charges 4.9% for the life of the balance, on debt shifted in the first 90 days, plus a one-off fee of 3% of the debt-shifted. After number crunching it works out cheapest if your debt takes roughly longer than four and a half years to repay (although of course taking longer to repay the debt will be more costly overall).

3) A Loan -

Asda also offers 6.9% but only for amounts over £7,500.


Can anyone advise which one would be best for me? (see above information)

CLAPTON

you seem to be learning very fast indeed.


with debts of 8500 and with 200 per month then
it will take just over 4 years if you can get equivalent of 6.9%

so if you are would like the certainty of regular payments over four years then the ASDA loan's worth a try.

the CC citibank at 4.9% and the fee will take about the same time but you need to check what citibank minimum monthly payment is ... 200 on 8500 is only 2.35% which is below many CC minimum amount.

the 0% CC will be the best in terms of interest/fees but you you have the risk of not getting another deal when you want it and again you must check the minimum monthly repayment

and of course you may not get a sufficent credit limit... depends upon your credit rating and salary etc.

basically, in relation to your debts, 200 isn't a great deal of money to be repaying, so I'ld try the loan first and see whether they will give you 8,500 at that rate.

sapphire12_2

Thank you very much for your help.

I think I'll probably try for the loan. That looks to be the best option for me as I like the idea of the "certainty of regular payments over four years". The other options seem like too much of a risk and I like the idea of not having to worry about the credit cards anymore and just paying off the loan.

fatbelly

CLAPTON wrote: »

the CC citibank at 4.9% and the fee will take about the same time but you need to check what citibank minimum monthly payment is ... 200 on 8500 is only 2.35% which is below many CC minimum amount.

FYI Citicard have a min payment of 2.25%