Loan almost paid off - would you do this?

[CatKisser]

I've got 2 more installments left of a £4.5k Natwest loan (woohoo!)
When I logged into my online banking today it suggested I book in for a review and consider my options. I currently have a £1650 overdraft, a CC at £1300 and another CC at £400. I desperately want rid of these as I'm wasting so much on interest and charges.
My pal reckons Natwest will offer me more finance on the existing loan. Would you do this, if it meant totally getting rid of the CCs and OD and just having one payment going out each month?

I have poor credit so a loan elsewhere is extremely unlikely.

Yes if it was at a good rate (and if you don't keep using the credit card, or run up more debt in other ways)

No, the CCs have long been cut up and I never, ever want to be in debt again. The loan is NOT a great rate, but given my poor credit I think I'm just going to have to accept it.

It's not a given that you'll have anything to 'accept'

Your account has likely come up for review due to the end of your current loan but that doesn't mean they'll lend you anymore now, particularly if you have bad credit- they just want to try and see if they can sell you anything.

Have a chat with them and see what they can offer then you can make a decision if they can offer anything.

If it's a better rate than you currently pay and you have no further access to credit, it might be the right choice but frequently debt consolidation loans don't work.

They want you to borrow more.
They are purely looking at their own profit margins.
They make more money out of debtors than they do savers.

You look after yourself and let them stew.

DO NOT refinance anything.

How much are you paying towards the loan each month? I'd really consider knuckling down and paying off your other debts in the same way you have this loan. They aren't doing it to be helpful, they are doing it to make. Only out of you for a long period of time.

We've got out of (a lot) of debt by using monies that we'd previously paid to one creditor to increase payments on the next one. We figured we'd managed without the money while we were paying it out, so we'd carry on not 'having' it - but be out of debt earlier by doing so.

Be very careful. Did you take out the NatWest loan to consolidate previous debt and then run up more on the CC and overdraft? The debt consolidation cycle is a very real trap. I know you are sure that you will never run up more debt but it may only take one unexpected expense to land you right back where you are now.

I would look at Debt-Free Wannabe or Dealing With Debt, do your full statement of affairs and really work out what's achievable with your debt. Don't be suckered in by the bank, you are the perfect candidate for further credit for them - poor credit rating overall so unlikely/unable to shop around, but demonstrating good compliance with the current debt so likely to cough up for them. They won't care if you run up more debt elsewhere - in fact, that'll set them up nicely for consolidation loan number 3 :(

Look at the interest rates on your cc and od so that you know what to compare if they do offer. As with pp if you can be disciplined enough to pay off the same amounts and pay off the most expensive debts first you may get out of debt faster by not consolidating.

We consolidated a year ago. 3 years to go now but we've not added to the debt so it's working for us. Had to close the accounts though. We just weren't disciplined enough.

I think what I'd do is take the money I'd been paying off the loan with & pay it towards the £400 debt plus whatever you already pay off the £400 debt.

You'd finish that quite quickly then. Then I'd close the account & request a letter to confirm it was paid.

Then I'd take the money I'd been paying the loan with & the £400 debt and pay it towards the CC, pay it off & attack the overdraft.

Then you're in a much better position & you can ditch the packaged bank account & get one with no account fees.

It's boring but it works & your credit rating will improve each time you pay off a loan/cc/overdraft.

OP
on the CC debts, do the standing order trick and they will vanish in no time ...
details on this thread
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc

I totally forgot I'd posted this - apologies for not replying to your advice. Well, I looked at my options and decided to accept NatWest's offer of a further loan. (Please don't groan.)
I have borrowed £4000 @£129/month. I have paid of my OD and shut off the facility. (Got confirmation of this.) I have paid off my CC's in full and now need to shut these down. (No risk of spending as the cards themselves have been long cut up.) I also paid off a payday loan I'm deeply ashamed of.
I'm actually a good deal better off each month for having done all this and if it means paying £129 a moth for three years, I'll be ecstatic.

Catkisser
At least you have a handle on it : the next stage is to alter your spending habits so it never happens again

Oh it never will and the spending is significantly better. I actually go hot and cold, thinking about the way I ploughed through that credit card! I am DONE worrying in bed about money at night.

Are you ditching the packaged bank account too?.

Well I looked into that, Fluffy, and now that I have no overdradt, the account itself is free. However, Halifax do a good account which gives you £100 to transfer and £5/month for having the account!
I have no reason now to keep a current account with NatWest....what do you reckon? It seems such a big move - I've been with NatWest for 15 years!

I've had 3 current accounts this year. Halifax was one of them and was very good.

Swapping accounts to get the incentives is called churning. Dh is still with them and has had good service.

Impressive, Fluffy! I don;t know why I see moving bank as such a huge deal. My friend raves about Halifax and tbh £100 would come in handy... plus there's a branch in my town, whereas NatWest is 15 miles away!
I will go in this week and see what they say. Did you have any hassle with DDs bouncing?

No, none. The government basically told the banks to sort their shit out and make it easier to change banks.

It takes 7 days to switch and if it goes wrong and you get od charges they'll usually reimburse you iirc.

I swapped the joint account twice as well. No trouble there either.