Taking out loan to pay existing debts

chelseah13 · 18 August 2019 at 11:41AM

Hey,

I’ve been reading a lot around this and I’m sorry for similarity with other posts but I’d just really appreciate some guidance!

I’m having a lot of anxiety over my credit card and finance accounts in general. Although I’m not struggling to make repayments, I dread getting statements every month and would feel more at ease if things were just paid off.

Is it worth paying off my credit card debt and my remaining balance on my Littlewoods account with a loan, and then just paying back the loan? I’m not paying interest on my Littlewoods account so I don’t know if I’d be worse off if I paid my remaining balance in full, or if my credit rating would be poorer for taking on more debt:

I’ve used a loan calculator and figured out a sum that would pay off my credit card and Littlewoods account and I would be able to pay the monthly sum. The difference is I’d just be paying off the loan each month rather than individual bills.

Can anyone help on this? I’ve been reading so many different things and I just feel a little lost. I don’t want to make any rash decisions or hurt my credit rating which is currently good.

Thank you

MallyGirl · 18 August 2019 at 11:52AM

Ignore the credit rating. Only your payment history matters.
There is no sense in paying off interest free debt with a loan that charges interest so I would leave the Littlewoods one alone.
For the rest of the debts you haven't said what interest they charge. If it is standard credit card apr then you could save money by balance transferring to a card with a 0% BT deal (if you can get one).

jonesMUFCforever · 18 August 2019 at 11:58AM

So you pay everything off with a loan - you will feel better?
How? You will still have to make a loan repayment and what will stop you spending more on your cards in the meantime meaning in 2/3/4 years time you will be in the same boat if not worse?

Dobbibill · 18 August 2019 at 12:08PM

Whether £100 leaves your account in one go or as a ten £10 payments is neither here or there - it still leaves.
The benefits of not having a loan is you don't get tempted to run up further debt on the empty cards/credit accounts. You also have the ability to overpay the debt costing you the most in interest before others meaning you can chip away at them one at a time in baby steps.

Why not head over to the DFW board and post a SOA for the friendly members to see where you can cut back to be DF sooner.

All the best.

redpete · 18 August 2019 at 8:38PM

You're fretting over the two bills you have to pay each month (credit card and Littlewoods) yet you think replacing these with just one a month (loan repayments) will make such a difference? Doesn't make sense to me.

Terry_Towelling · 18 August 2019 at 9:11PM

What's the credit card interest rate and how big is the debt? How much do you pay off it each month?

What's the Littlewoods debt and how much are you asked to pay off that each month?

Taking out loan to pay existing debts

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