Credit card for debt consolidation

Shashman

Shashman

Shashman

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Joined
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Posts
438
Location
Bournemouth
In a nutshell:

I have a bad credit score and have been turned down for a credit card application in the past. I have a couple of debts which I'm paying just over £200/month towards, which I would like to consolidate into one monthly, smaller, easier to manage payment. There's about £600 left on one, and £300 on the other. One is to Student Loans Company and the other to Southampton City Council.

Do any of you who have been in a similar situation have any advice or recommendations on which card company to choose? Any advice at all? NatWest rejected my application so I'm thinking one of these credit-building/low credit score cards could be the solution for me. I don't really mind high APR, as with my credit score, it's to be expected. I'd just like to pay less than I currently am every month, and for payment to be regular.

Cheers.

P.S.
I know there's stigma attached to credit cards, but I have a regular income (salary) and will only be using this credit card to pay off these 2 debts. I'm not going to be using it for purchases.
 
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I wouldn't use a credit card to settle a debt. Go and speak to a bank about a loan you'll get a better rate. Unless you get a 0% transfer or balance period on a credit card, but even then you have to make sure you pay it off quickly enough before the offer period ends.

That said it doesn't sound as though you have much left, so why bother at all?
 
Why not continue to pay £200 for another 4.5 months and be done with it? Rather than the faff of a credit card balance transfer, and then to be charged an absolute fortune on that "privilege".

If you credit rating is so poor perhaps you should look to amend that, too.
 
wingman said:
Why not continue to pay £200 for another 4.5 months and be done with it? Rather than the faff of a credit card balance transfer, and then to be charged an absolute fortune on that "privilege"
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Well Tesco are doing a card with 0% fee on balance transfers, then 0% for 12 months at the minute.

Not that it will help the OP that much if he is getting turned down on applications anyway.
 
Freakbro said:
Well Tesco are doing a card with 0% fee on balance transfers, then 0% for 12 months at the minute.

Not that it will help the OP that much if he is getting turned down on applications anyway
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I would have suggested the exact same thing, were it not for the second point you made.
 
Aren't credit-building cards just that? Improving my credit score? This is another reason why I'm considering applying for one and going down this route.

I would much rather be paying I don't know, £30 per month, on a set day each month, than the £100 here, £112 there which is what I'm doing at the moment on different dates each month.

I still qualify for a NatWest graduate loan, and that's another option, but I'm looking into the credit card option at the moment.

So you reckon the Tesco card is decent?
 
Capital One would probably say yes, at a high rate. It might be worth getting one to build your rating a bit - but probably not to pay off debt you're already managing with?

Edit - they'll probably give you a low limit too, to start with.
 
It's not a question of managing the debt though. I can afford it. I'm on a decent weekly salary.
It's just a pain at the moment having to pay one debt one week and the other another. Couple this with bills and rent etc, and each week is more of a struggle than it could be.
 
A credit card won't work well as you need a decent credit rating and the rates are fairly high - typically 18-29%. It's also an open-ended debt, you'd be better off with something with a fixed term and then it's done. They also usually require a good credit rating due to their nature of allowing you to rack up extra debts.

You should be able to get a better deal on a loan from a bank for around £1000, or your bank may be able to give you an overdraft extension - potentially even with an interest free period.

Without knowing what other debts you have, however, or what your credit rating is like, it can be hard to work out what your best option may be. Personally I'd just pay off the £200 a month and get it out of the way, but if you want to spread it over 12 months there are plenty of loans available for £1000-5000 over 1-5 years at decent rates of 5-15% if you spread it over a couple of years.

How much are you happy to spend a month and how much more are you happy to spend? You could easily get a 2 year loan with monthly repayments of £45-50 ish, paying back an extra £100-200 over the 2 years. The rate will be as good as or better than a credit card, and you generally don't need quite as good a credit rating due to them being a fixed amount, at a fixed rate with a fixed repayment - there's less risk of you racking up more debt than you can handle.

Get hold of your credit report and see what your rating is like, then go see a bank manager/advisor.
 
Your poor score you're currently rocking isn't there for no reason though. My first credit card was with NatWest at 18 years old with no previous credit. You must have done something to upset the score.

Get on top of your debt by getting rid of it first, THEN apply for a decent credit card worth having, and then use that going forward to build your rating, ensuring you pay off the total balance each month as to not incur interest.

I do not see the point in consolidating your debts so that you have one outgoing transaction each month, rather than a few. I further do not understand why you'd want to pay for that "pleasure".
 
Shashman said:
It's not a question of managing the debt though. I can afford it. I'm on a decent weekly salary.
It's just a pain at the moment having to pay one debt one week and the other another. Couple this with bills and rent etc, and each week is more of a struggle than it could be.
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Eh? So your only problem is having to pay two separate bills? And for that you want to get the hassle of another credit card?

It's not worth it, and you don't have so much left to pay, just budget properly and pay it off as you are.
 
@Audigex: Ideally, I'd like to be spending £50 per month. I don't mind it being spread over a couple of years and paying a bit more. I could even pay it off completely, early, down the line. I'm expecting my wages to increase in the next year or so anyway.

How is getting another credit card a "hassle", if in the process, my credit score will improve and it'll make my monthly outgoings easier to manage?
 
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If you've got a bad rating you won't get a card with a good APR, with the credit building cards you're looking at upwards of 39% APR, DO NOT TRY AND SPREAD YOUR DEBT OVER A COUPLE OF YEARS AT THAT SORT OF APR!
In 4 and a bit months you'll be clear of debt doing it how you are now so stick with it.
The only time to transfer debts to a CC as has already been said is when they've got a good 0% balance transfer period (Which you won't be able to get if even your own bank are turning you down), apart from that it's a very silly way to manage debt.
 
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Shashman said:
It's not a question of managing the debt though. I can afford it. I'm on a decent weekly salary.
It's just a pain at the moment having to pay one debt one week and the other another. Couple this with bills and rent etc, and each week is more of a struggle than it could be.
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Set up a couple of standing orders?

Clear your debt, then get a credit card. You'd be crazy to want to spread your debts out over two years when you are easily capable of clearing them in 4 months. When your debt is cleared, you'll be able to get a better credit card if you still want one, and won't have ANY monthly payments to worry about. It's only £900 - get it cleared asap.
 
Shashman said:
I thought "balance transfer" was only from another credit card?

These 2 debts would be paid off as "purchases".
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It is indeed, but that's the only time you really want to be transferring any debt to a CC.
Either way the APR on a credit building card is stupidly high, don't do it.
If you want to build your credit pay off these debts with cash, then get a credit card and buy anything you'd normally buy with a debit card on it and set up the DD to pay it off in full each month.
 
Shashman said:
In a nutshell:

I have a bad credit score and have been turned down for a credit card application in the past. I have a couple of debts which I'm paying just over £200/month towards, which I would like to consolidate into one monthly, smaller, easier to manage payment. There's about £600 left on one, and £300 on the other. One is to Student Loans Company and the other to Southampton City Council.

Do any of you who have been in a similar situation have any advice or recommendations on which card company to choose? Any advice at all? NatWest rejected my application so I'm thinking one of these credit-building/low credit score cards could be the solution for me. I don't really mind high APR, as with my credit score, it's to be expected. I'd just like to pay less than I currently am every month, and for payment to be regular.

Cheers.

P.S.
I know there's stigma attached to credit cards, but I have a regular income (salary) and will only be using this credit card to pay off these 2 debts. I'm not going to be using it for purchases.
Click to expand...

Why dont you call them up and pay it off directly, maybe ask them if they could lower the payment rates. If you want to get a good credit rating open a savings account and get a pre paid credit card.
 
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