I think I've done something silly.

[poopcollector101]

I've had bad credit in the past (ccj, defaults the lot)

I currently have 4 credit cards, all fairly sub prime (APR's around 29-39%) the balances are:
1: 1700 / 2500
2: 750 / 800
3: 370 / 400
4: 200 / 250

For ages I've been wishing I could just have the one card, with one balance to pay each month. I generally manage them quite well and pay over the amount requested each month. I've had my bank account for about 12 years and I logged in on Monday and it said I was eligible for a loan. Thinking 'yeah right' I applied, asked for 5k.

Much to my surprise they've accepted me the money landed in my bank this morning. Now the APR is still high at 23% but not as bad as my CC's. The repayments are £141 a month for 5 years. I feel a bit panicky as thats a lot to pay out each month for a long time, however its probably roughly what I pay off my cards each month (but you can use the money again if you need to!)

Should I cancel the loan? Should I ask for less? Should I stick with it?

Sorry forgot to add, it may not be obvious, but I thought I would use the money to pay off the cards and shut the accounts.

Not a bad idea as long as you actually do shut the accounts and don’t let your debt creep up again. Good luck 😊

Honestly I'd consolidate the credit cards, and then see if you can get a revised rate next year on the loan.

If the interest is less on the loan it makes sense that way, but if you only owe £3k then you would have £2k spare on the loan which you won’t need to pay off the debt. What were you planning on doing with the spare cash? I’m not sure if you can ask for less from the bank in this instance?!

If you took the loan, you would need to make sure you don’t run up credit on multiple cards again and learn to budget better.

@AllTheCakes I'm not sure why I chose 5k, I didn't sit down to work out my CC debt, I just thought 'oh about 5k, they won't accept me anyway!'

Use the loan to pay all your credit cards off.

And don't get another one until you can trust yourself, and you are in a position to pay it off in full every month.

Why did you ask for a loan for more than you needed?

You only need £4K so as a minimum drop it to that.

This sentence is your issue: but you can use the money again if you need to this shows your mindset. You need to stop think of these cards as an overdraft. You clever aren’t on the breadline as you overpay, so this is a belt tightening job.

In your position I’d do this:

• you do accepted for a loan so worth chilecking you wouldn’t also be accepted for a low interest/ no interest for X months credit card. If you are, transfer to that instead.

• if the loan is the only option then keep it but drop it to the precise amount you need. Do not borrow extra! This is not a windfall it is a very pricey way to borrow money!

• print out three months of bank and credit card statements, get several colours of highlighter and go through and highlight everything as either: essential (Rent, water, gas, electricity, tv license), tied in (mobile, tv package...), weekly shop, petrol, eating out, kids, extras (coffee out, luxury - make up etc - shopping)...

Tot up each category and find your weak spots. You’ll find them! I have a habit of saying to myself ‘oh fizzy drinks and biscuits are so expensive, I can’t buy those’ for the weekly shop and then having loads of coffees and cakes out. Every few £ you can save you can put towards the debt, even a few quid extra chips away. If you put an extra fiver in you save £1.15 in interest!

• find stuff to sell. eBay everything!

Put the extra money into an account and use this account like a cc. Any money used because of emergencies such a car break down etc gets repaid in full the next month. Do this until the whole loan is paid off - it will provide you with contingency money.

Just pay off the loan as soon a you get it- the money you don't need, that will reduce the term.

So over pay the amount that you don't need within the first couple of months.

Reduce the loan to the amount owing on your CC, clear the debts and get rid of all the cards except one with a low credit limit because it does sound like you will start using the cards again.

You need to budget so you don't need to 'use the money again'. You seem to be constantly living way over your income OP.

Pay off the cards and cancel them.

Pay off the loan.

Don't borrow any more.

I'd take the loan as the interest rate is lower, but you MUST MUST MUST cut up all the cards and do not use them again, unless you have the discipline to pay off any spends in full every month, so debt doesn't build up or cost interest.

There are lots of good reasons to have at least one credit card that is nothing to do with spending money you don't have such as short term cash flow issues, to pay for work expenses where it is a few weeks before you get the money, to provide consumer protection if the supplier goes bust or doesn't provide the item/service you paid for or to hire a car abroad, which is likely to be very difficult and more expensive without one.

You may also find that the interest rate on £5k loan is less than lower amounts so it might be worth taking the full £5k and paying some back straight away so you pay less interest.

I'd also have a good look through your budget and make sure you live within your means and build up some savings so you can pay for things without using credit.

What's done is done, so I would pay off the cards, keep £1k (that is your emergency fund to stop you going into debt again) and pay remainder back off the loan - does the loan let you pay whatever you like each month?

Then stick to a plan, earn as much as possible and spend as little as possible, putting as much as you can every month towards the debt - immediately after you have been paid, not at end of month.

There are many podcasts, youtube channels and books about creating a spending plan (budget). You need to be determined and change your attitude towards debt... you could then be out of consumer debt within a couple of years.

What about a new credit card on an interest free deal - couldn't you consolidate all the outstanding balances onto that?

Pay off the cards today, call your bank and pay 1500 off the loan. Keep 500 in a savings account for emergencies. as soon as you receive a 0 statement for each card pay it off.