What is best - credit card or bank loan??

[andwhatnow]

I separated from my husband a year ago and, for the first time in my life am in debt!! (apart from my mortgage of course). Money issues have been fraught and I have run up 5K on a credit card due to contributing to the mortgage for months (as well as renting my own home), buying a (second hand) car which I desperately needed and refurnishing a home.

The marital home is on the market and when it is eventually sold I will be due abut £20 K equity plus I am hoping my ex husband will be a bit more reasonable and honour his recent offer (he is a little more amicable now) of giving me a little extra to compensate for the furniture etc.

I bring home £2200 a month so am on a decent wage, and have a 'good' job, so am hopeful that when we do sell our house I will be able to get my foot on the housing ladder again.

However, in the meantime, I am worried about this debt. I am paying off about £100 a month, but will admit, I am getting into the terrible mindset of 'putting it on the credit card' which means I am loosing track of what I should be spending month to month. I am toying with the idea of getting a loan... I am currently on a 0% credit card but obviously have to consider juggling this around when the offer expires. I know that I would have to pay interest on a loan but the idea would be to get one, and then basically not use any credit cards.

Looking at whats about though, it would still take me at least three years to pay off and I wonder how banks would look at this when I apply for a mortgage eventually. Do credit cards or loans look worse/better? The other thing is that I can vary what I pay off the credit card but obviously the loan amount would be set. What would you all advise?

I would first suggest you keep a detailed record of for all your income and outgoings... cash withdrawals, credit card transactions, direct debits, standing orders etc. I always recommend MS Money free download here because I use it myself. Work out exactly what's coming in and going out so that you have a much better picture of how much 'spare' money you have each month with which to pay back your debt. See what potential there is to cut costs elsewhere in your budget - keeping a record should make it easy to work out where. Keeping a record, being conscious of everything you're spending, will mean you spend less.

If you are paying off £100 /month but still putting expenses on the credit card you are probably overspending.

Once you have the detailed information you can make a much better decision about credit cards and loans based on how much you can afford to pay back each month. Cards at 18% APR are more expensive than a loan at 8% but, as you rightly say, you are committed to meeting the loan payments in full every month. Transferring your card balance to another 0% card and making a plan to pay off as much as possible before the rate expires might get you through to the house-sale. Vitally important to stay within your budget and not take on any extra credit if go the balance transfer route, either to card or loan.

Regarding a mortgage. What lenders are most anxious to see is a good credit rating. Keep fully on top of the payments & bring the total balance of your debt down. HTH