Money!

[nicnicnic]

Hi All

I know that technically this question shouldnt be here, but I need help, and I need opinions, and I imagine this section is one of the most viewed on this site. I've got about �2000debt on credit cards, and it's really worrying me. I know it was stupid, but its done now. I cant afford to pay it all off, so I have two choices: make the payments as usual, meaning keeping my cards etc (they are on 0% interest at the mo) or getting a loan to pay them off and just paying that off every month. I would be able to pay back about �100 a month. Which do you think is the best option. Obviously I will cut up my cards!

Thanks in advance!! Please help

[sammd]

As your cards are on 0% interest it would be ideal to continue paying them off each month as you are as a loan will cost you more money. Maybe when it's no longer 0% interest consider a loan if the loan interest rate is lower. But either way cut them up now to avoid temptation for further spending!

[Tock389]

Don't panic - I was in exactly the same situation. I owed around �3,000 on three credit cards and was getting really worried about it. In the end, I went to my bank, and borrowed the money to pay them off.

The loan I took out has repayments of around �110 a month over five years, with a fixed rate of interest of 8.9 per cent. This solution is much cheaper than continuing to borrow the money from Visa or whoever, where interest can rise as high as 27 per cent.

Needless to say, I have cut up my cards and you must too. Hope this helps.

[Ausf-A]

I had debts that amounted to over 10 times your level, and sought help from the Consumer Credit Counselling Service. They were very friendly and helpful, and put me on a debt management plan. Visit their site at www.cccs.co.uk for advice, even if your debt looks like a small amount, they will give you a positive answer. Over the past 5 years I have managed to repay �26,000, with a few sacrifices here and there, with another 8K or so left to pay off. Best thing to do is not worry about the debt, rather be positive about it. Hope this helps

[joannie10]

pretty much agree with sammd in that while you are on 0% interest then continue paying as much as you can. If you are on 6 months 0% then around the 5th month find another lender which will offer you 0% on Balance Transfers. Best site for this is www.uswitch.com. Loan rates normally would be better than credit card rates but feel for a while you might manage to get 0%. Applications can normally be done online so are very straightforward and not time consuming.

good luck, �2000 is not a huge amount of debt in this day and age so you will get rid of it I am sure. Certainly not a financial adviser but see if anyway you can reduce your spending. I started taking lunches to work and think I am saving around �15 a week!!

[jason1980]

Good luck,

�2000.00 to me is a huge debt for anyone if you're only paying the minimum amount needed. I personally would get a loan to pay it off then cut up the cards and learn from it. It is really easy to run up credit card debt but I'd clear it before the interest starts as you can end up paying �50 a month for each card with only �15 or so clearing the balance the rest on interest.

[Ethmer]

If you can continue making payments on the cards at 0% then continue to do so. If necessary get a loan.

But, DON'T cut up your cards or close your accounts. Simply lock your cards away someplace and continue with on time payments.

Cutting up your cards and closing your accounts will contribute to hurting your credit rating whereas at least making the minimum monthly credit payments continues to help you establish good credit which may be necessary in the future for buying a car or a house.

[peterd]

I would try and get in touch with Payplan. I know someone who owes around 30k & Payplan have proved very helpful.

www.payplan.com

[Sparkles3]

I agree with some of the other posters who say stick with the 0% whilst its available and then move the balances onto other 0% cards - just set up a standing order to pay off the �100 every month and make sure you don't use them. Whilst a loan is a great idea to get the debt all together and forces you to pay it off with your monthly payments, even the low rate ones will have you paying interest on it. Provided you keep making payments every month, it shouldn't be a problem for your credit rating. GOOD LUCK!

[WendyS]

I'd certainly continue to take advantage of the 0% interest deal as long as it's available and pay off every month as much as you can afford. Meanwhile, are there any other ways you can source some money, i.e. getting an extra job, selling some possession that you could manage to do without. Also, have you seriously scrutinised your weekly budget to see if there are any luxuries you could do without? i.e. buying lunch instead of taking home-made sandwiches. Cooking home-made meals instead of buying takeaways, etc.? I obviously don't know what your lifestyle is but sometimes there are quite substantial long term savings to be made from some of these areas. Good luck and keep plugging away at the debt.

[Killerschick]

Right now it sounds like you're not having any difficulty meeting minimum payments so your credit rating will be nice and healthy. Therefore don't go for a debt management plan such as those offered by CCCS or Payplan. I agree that they are fantastic if you've run up debts to the point where you can't meet the payments anymore and you're credit rating is already knackered but this isn't where you are. If you enter a debt management plan it goes on your credit history and will be with you for the next six years. I don't think you need to because the amount you can pay is more than the minimum payments on the cards.

As recommended by some previous posters I would keep paying the cards (as much as you can afford) until they start charging interest. Then you could get another 0% card, switch the balances to that card then keep reducing the balance until that one charges interest then repeat until the whole lot's cleared (at �100pm it'll only take 20 months!). The drawback is that you'd still have the temptation of having a credit card but you can always cut it up. Alternatively, go for a personal loan at a good rate and put it over a term which makes the payments affordable to you. When the cards start charging interest go ahead with the loan application & pay them off. If you then keep up the payments to the loan it will be paid back over the term agreed.

Whatever you do, as long as you don't miss any payments your credit rating won't be affected by this. You are not stupid at all, credit is very tempting and I actually think you were very wise to realise your position with only �2000 debt. I work for an organisation dealing with debt problems and rarely see anyone with less than �20,000 by which point they can't afford the payments, the interest is crippling and their credit rating is shot to pieces.