0% balance transfers

[southeastastra]

I have noticed my credit card that i used to clear some credit using the 0% is going up next month as my 24 interest free is up. i then opened another card to tranfer the debt to, but it only allows 2/3rd of the debt. so i now have three cards with debts on them. what can i do, the main card is barclaycard and has about 5k on it and now i have two more with a couple of thousand on one and thousand on another. i feel like i'm getting in a mess with them and my credit report has now gone down due to this new card. any suggestions on how i sort this out? feeling a bit anxious now :(

stop spending on the credit cards and pay off as much as you can on the card with the highest interest rate

First, you have to stop spending more than your income. You need to set your lifestyle expectations such that you have at least £200-£300 left over at the end of each month. You can't have everything you want.

Second, pick the card with the smallest debt, pay it all off asap and set up a direct debit to clear the balance on that card in full every month. Only do any new spending on that card. You won't get anything under control if you are still spending. It doesn't matter what the interest rate is on this card, balances cleared in full each month do not get charged interest.

Next, start paying off the remaining cards with that money you have started having left over each month, paying just the minimum amount on other cards. As each card hits zero, close the account.

Good luck.

You could try ringing the main 0% card and asking if they would consider upping your limit so you could transfer the other balances. If they won't do this now sometimes they will agree to review the credit limit after 3 months if you have shown you are managing the account well (paying more than minimum). Make sure you check how long the interest free balance transfer period is for though if you do this.

If your debts are so high relative to your income that you are struggling to bring them down and unable to pay off more than the minimum each month then you may benefit from seeking debt advice from CAB or one of the other free services. Every time you shift money onto a 0% card you're paying a transfer fee.

First things first, cut up all the cards. Are you able to make the minimum payments on each card every month? What kinds of expenditure are you putting on credit? Luxuries like clothes or the weekly food shop?

Really, you've hit the brick wall of realising there's a problem, this is one of the most important steps. Now comes the difficult part, where you realise you're going to have to make changes. What's often a good idea is to write down a statement of financial affairs which lists clearly what money is coming in and what money is going out.

cut up the cards, convert all the payments to standing orders rather than direct debits

(min pay direct debit takes DECADES to clear a debt, standing order does it in three years)

and then learn to live within your means

i can pay the debts off each month but am just worried as i now have 3 cards, i only use one for spending. how would i know how much to set up for the standing order? sorry to sound dense

Standing order = whatever you paid last month rounded up to the nearest £5
OR
5% of the credit limit on the account is a nice method as then you can use it without risking fees

or keep the minimum direct debit payment and set up a standing order to pay off a bit extra each month.

my problem with direct debits is that the bank choose the amount rather than you ...

the credit card provider chooses the minimum amount for you which depends on the balance. You can then choose to make extra payments as well. At least with leaving the minimum direct debit payment running you would always be sure that a payment is made when it is due

but the standing order method holds the amount steady and clears the balance in 3 years rather than 18 - paying an amount that has already proved affordable, because the borrower paid it this month.

the bank will always set the direct debit so as to make the most profit within the law.

surely it depends on the amount of the standing order and the size of the debt as to how long it will take to pay it off. Whatever the OP does she needs to pay more than the minimum payment especially if the card no longer has a 0% interest rate

dementedpixie
No. Sorry, but I've done this to death on my spreadsheets ....

If you set up a standing order for this months amount, the debt will clear in between 2 and 3 years.

If you do what the bank want and pay the reducing balance, it will take around 18 years.

ah that makes sense, then, i shall set up a standing order for the accounts and then pay off additional amounts if i can afford to?

good call
the standing order means you can never miss a payment and are always bashing the debt but at a level you know you can already afford
then the extra lump sums (best done by FPS) are the icing on the cake

thank you will sort it out tonight