Should I apply for a personal loan to clear high interest rate credit card?

Mapbroke · 11 January 2019 at 2:20PM

Hello,

I have a credit card that's up to about £3,000, and the APR is 49% a year. I have applied for a balance transfer card but been declined. My credit report shows that I am a candidate for a personal loan though, as I have a decent income and very little debt other than this one card.

Would it be better to apply for a loan with a lower interest rate to pay off this card? My intention would be that I could then pay the loan off as soon as possible.

Let me know if you need any more info - but any advice much appreciated! I am paying what I can on this card but mostly it is being swallowed up by the interest every month.

Thanks

DCFC79 · 11 January 2019 at 2:24PM

Mapbroke wrote: »

Hello,

I have a credit card that's up to about £3,000, and the APR is 49% a year. I have applied for a balance transfer card but been declined. My credit report shows that I am a candidate for a personal loan though, as I have a decent income and very little debt other than this one card.

Would it be better to apply for a loan with a lower interest rate to pay off this card? My intention would be that I could then pay the loan off as soon as possible.

Let me know if you need any more info - but any advice much appreciated! I am paying what I can on this card but mostly it is being swallowed up by the interest every month.

Thanks

It all depends if you can get a loan to pay the loan off.

You say a decent income, why not look at your spending and cut back.

What is the card ?
Looks like a sub prime card.

Any negatives on your reports ?

It suggests to me you have a limited history, do your reports reflect that ?

[Deleted User] · 11 January 2019 at 2:24PM

Anything you can do to beat that rate would be a good idea.

However, ensure you can meet the monthly payments and you'll also need to address the cause of the debt to date. Otherwise you'll end up with a loan and a card balance.

What credit card did you apply for ? Did you try an eligibility checker first? Your situation suggests you're not going to get anything close to a great card, but even a mediocre BT card would help.

spadoosh · 11 January 2019 at 2:25PM

Theres two train sof thought with this.

The first is yes you should, its obviously (Read really should be and make sure it is!) going to be cheaper and save you money.

The second is no you shouldnt, theres likely some track record ofnot managing money well and getting a loan whilst still having the credit card (Which is physically how it would work) gives you access to a lot more debt which you might be inclined to use compounding any issues there might be.

I tend to favour the first giving people the benefit of doubt. That said, its all moot if you dont get offered a loan. 49% APR and not being accepted for a balance transfer card paints a less than rosy picture of youre credit history and or affordability.

foxy-stoat · 11 January 2019 at 2:25PM

At 49% I bet. Can you not just over pay the credit card and not the minimum?

If you do get the loan, cancel the credit card and dont use them in a while.

Mapbroke · 11 January 2019 at 2:44PM

It's a Vanquis card - I have a poor credit rating because of no credit history, but I ran this up last year when I was unemployed. I now have a permanent job so I could easily make the same repayments on a loan every month that I am currently paying on the credit card, but at a much lower interest rate. I am also looking at my spending, ways to cut back etc. Thanks for your reply, I will try applying for a loan and if I get rejected will just have to try and pa as much of the card off as I can. And cut the card up!

Mapbroke · 11 January 2019 at 2:45PM

I tried the eligibility checker and applied for the card I was most likely to be accepted for but it was rejected. I can definitely make the same payments on a loan that I am currently paying on the card, but I thought if I could get a lower interest rate that would help me clear it more quickly. Thanks for your reply

Willing2Learn · 11 January 2019 at 2:48PM

Hi Mapbroke,

Why not apply for a 0% balance transfer card from CapitalOne? It is a sub-prime card and your chances of acceptance would therefore be higher

https://www.capitalone.co.uk/creditcards/0-balance-transfer-credit-card-12-months.jsf

Mapbroke · 11 January 2019 at 2:54PM

Thanks - I don't think I would be accepted for this card though, it says for people with excellent credit rating and mine is poor at the moment.

Willing2Learn · 11 January 2019 at 2:56PM

I got accepted for a CapitalOne BT card while I was unemployed...They only gave me a six-month promotional period though (I applied for the 12-month card and assume they reduced to six-month due to my circumstances)...

Mapbroke · 11 January 2019 at 3:07PM

So I just applied and they've approved £1,000 balance transfer at 0% interest for 6 months.

Do you know if this means £1,000 will be paid from my high interest card and transferred to the new card?

Should I apply for a personal loan to clear high interest rate credit card?

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