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  • FIRST POST
    • Mapbroke
    • By Mapbroke 11th Jan 19, 1:20 PM
    • 11Posts
    • 5Thanks
    Mapbroke
    Should I apply for a personal loan to clear high interest rate credit card?
    • #1
    • 11th Jan 19, 1:20 PM
    Should I apply for a personal loan to clear high interest rate credit card? 11th Jan 19 at 1:20 PM
    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
Page 1
    • DCFC79
    • By DCFC79 11th Jan 19, 1:24 PM
    • 33,350 Posts
    • 20,995 Thanks
    DCFC79
    • #2
    • 11th Jan 19, 1:24 PM
    • #2
    • 11th Jan 19, 1:24 PM
    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
    Originally posted by Mapbroke
    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 ?
    Last edited by DCFC79; 11-01-2019 at 1:27 PM.
    • zx81
    • By zx81 11th Jan 19, 1:24 PM
    • 20,114 Posts
    • 21,469 Thanks
    zx81
    • #3
    • 11th Jan 19, 1:24 PM
    • #3
    • 11th Jan 19, 1:24 PM
    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
    • By spadoosh 11th Jan 19, 1:25 PM
    • 6,106 Posts
    • 8,567 Thanks
    spadoosh
    • #4
    • 11th Jan 19, 1:25 PM
    • #4
    • 11th Jan 19, 1:25 PM
    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.
    Don't be angry!
    • foxy-stoat
    • By foxy-stoat 11th Jan 19, 1:25 PM
    • 3,394 Posts
    • 1,908 Thanks
    foxy-stoat
    • #5
    • 11th Jan 19, 1:25 PM
    • #5
    • 11th Jan 19, 1:25 PM
    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
    • By Mapbroke 11th Jan 19, 1:44 PM
    • 11 Posts
    • 5 Thanks
    Mapbroke
    • #6
    • 11th Jan 19, 1:44 PM
    • #6
    • 11th Jan 19, 1:44 PM
    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
    • By Mapbroke 11th Jan 19, 1:45 PM
    • 11 Posts
    • 5 Thanks
    Mapbroke
    • #7
    • 11th Jan 19, 1:45 PM
    • #7
    • 11th Jan 19, 1:45 PM
    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
    • By Willing2Learn 11th Jan 19, 1:48 PM
    • 1,977 Posts
    • 1,538 Thanks
    Willing2Learn
    • #8
    • 11th Jan 19, 1:48 PM
    • #8
    • 11th Jan 19, 1:48 PM
    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
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • Mapbroke
    • By Mapbroke 11th Jan 19, 1:54 PM
    • 11 Posts
    • 5 Thanks
    Mapbroke
    • #9
    • 11th Jan 19, 1:54 PM
    • #9
    • 11th Jan 19, 1:54 PM
    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
    • By Willing2Learn 11th Jan 19, 1:56 PM
    • 1,977 Posts
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    Willing2Learn
    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)...
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • Mapbroke
    • By Mapbroke 11th Jan 19, 2:07 PM
    • 11 Posts
    • 5 Thanks
    Mapbroke
    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?
    • zx81
    • By zx81 11th Jan 19, 2:08 PM
    • 20,114 Posts
    • 21,469 Thanks
    zx81
    No. It means you need to contact Cap One and ask them to carry out a balance transfer from your Vanquis card.

    Be aware that there are sometimes issues with BT'ing from Vanquis.
    • Mapbroke
    • By Mapbroke 11th Jan 19, 2:13 PM
    • 11 Posts
    • 5 Thanks
    Mapbroke
    Thank you, good to know. With balance transfer can they take part of the balance or only the whole amount? In this case balance is 3,000 but only been approved 1,000 balance transfer to 0% card.
    • zx81
    • By zx81 11th Jan 19, 2:14 PM
    • 20,114 Posts
    • 21,469 Thanks
    zx81
    It cannot be any more than the limit - usually around 95%.
    • Willing2Learn
    • By Willing2Learn 11th Jan 19, 2:23 PM
    • 1,977 Posts
    • 1,538 Thanks
    Willing2Learn
    @Mapbroke

    Just make sure you use the 0% promotional period to reduce your overall debt-level. Make your monthly payments more than the minimum so that the debt reduces quicker. Apply for another BT card when the six-months is up.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • zx81
    • By zx81 11th Jan 19, 2:30 PM
    • 20,114 Posts
    • 21,469 Thanks
    zx81
    Make your monthly payments more than the minimum so that the debt reduces quicker.
    Originally posted by Willing2Learn
    Just to clarify - the OP needs to focus on the remaining 2k on the Vanquis card, so extra payments need to go to that card.
    • Willing2Learn
    • By Willing2Learn 11th Jan 19, 2:31 PM
    • 1,977 Posts
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    Willing2Learn
    I'd disagree with that bit. The OP needs to focus on the remaining 2k on the Vanquis card.
    Originally posted by zx81
    I agree, focus on the Vanquis card. I have admonished myself accordingly.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • Tarambor
    • By Tarambor 11th Jan 19, 2:33 PM
    • 4,248 Posts
    • 3,259 Thanks
    Tarambor
    Thank you, good to know. With balance transfer can they take part of the balance or only the whole amount? In this case balance is 3,000 but only been approved 1,000 balance transfer to 0% card.
    Originally posted by Mapbroke
    You can ask them to transfer the maximum they can transfer on the 0% card from your existing card. You will then owe say 1000 at 0% to the new card and 2000 at 49.9% to the existing card.

    Your plan then is set up a direct debit to make the minimum payment on the 0% card and pay off absolutely every penny you can afford every month on the 49.9% card until it is clear. Once the 49.9% card is clear you then work out how many months left of the 0% deal you have, divide what you owe by that then amend the direct debit to that amount so the 0% is cleared by the end of the deal.

    Once clear of the debts and if you trust yourself with money you can get a card that pays cash back on purchases and set the direct debit to clear off in full every month, cancelling the other cards. Use that card to do some of your normal spending, i.e petrol or weekly shop. Use it to pay some of anything you buy over 100 for the Section 75 protection. What you will now do is build up some positive credit history and get rewarded for doing so.
    • Mapbroke
    • By Mapbroke 11th Jan 19, 3:06 PM
    • 11 Posts
    • 5 Thanks
    Mapbroke
    Ok so to clarify - I am better off paying as much as I can on the Vanquis card in the next six months, and just the minimum payment on the 1,000 0% interest card?
    • Willing2Learn
    • By Willing2Learn 11th Jan 19, 3:07 PM
    • 1,977 Posts
    • 1,538 Thanks
    Willing2Learn
    Ok so to clarify - I am better off paying as much as I can on the Vanquis card in the next six months, and just the minimum payment on the 1,000 0% interest card?
    Originally posted by Mapbroke
    Correct - That method is the MSE method as it saves the most money! (reduces total interest paid)
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

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