Advice re catalogue/ credit card

[Dottedskull]

Since last year I've accumulated around £1300 on my JDWilliams catalogue account. This is 69.9%APR I believe.
I really struggle to understand interest rates and how they work, but my understanding is this is incredibly high interest?
I've only been paying minimum payment over the last year, as well as continuing to purchase. I've stopped doing so now.

I was looking into credit cards to see if there's any I could get that offer 0% on purchases for x amount of months to use this to pay a chunk off my JDWilliams account. Or if its at all possible to do a balance transfer from a catalogue account to a credit card.

I've been accepted for capital one credit card which I believe is 34.9% APR, so this is significantly lower interest rate?
I've just been on the phone to them but struggled to hear as the line was bad. But I'm sure she said that I do have 0% interest on purchases until October 22. And she confirmed that a transaction for £5 I recently made on JDWilliams does count as a purchase. She also said I have a balance transfer offer but I forgot to ask if this could be used with my catalogue.

I've only got £500 limit on there and the 0% interest runs out in Oct.
I will wait until April to view my statement and also seek further advice. But wondered if either of these options were feasible.

Could I use the next few months using it and clearing whole balance in month, in the hope that they will increase my credit, and then before oct, pay as much as I can off JDWilliams, as surely if it defo does count as a purchase, then owing the money to capital one at 34.9% apr is better than owing it to JDWilliams at 69.9% apr.

Or use the whole £500 credit limit I currently have to pay off my JDWilliams account now and pay the £500 at 0% to capital one over the next few months (doable at a push), and then pay the remaining with the credit card so I clear JDWilliams and owe capital one the rest of the balance at 34.9%.

Or see if I can transfer the balance from a catalogue to a credit card?

Any help would be greatly appreciated. I struggle to comprehend things like this and really don't wanna make the situation worse.
Thanks for reading!
Sorry its so long!

Get a 0% purchases credit card..There are lots of them on the market at the min. It gives you 0% on purchases for x amount of months. You could use that, pay off your JD and then make the min payment on that card to clear it.

Yes, 69.6% interest is really high and by you only paying the min payment; you're just racking up interest.

Is £500 credit limit all your eligible for? You can even find some for up to 23 month interest free. Use a comparison site so that you can see your best option. And they usually tell you if you're pre-approved that way you won't mess up your credit rating.

@ISayItLikeItIs

Get a 0% purchases credit card..There are lots of them on the market at the min. It gives you 0% on purchases for x amount of months. You could use that, pay off your JD and then make the min payment on that card to clear it.

Yes, 69.6% interest is really high and by you only paying the min payment; you're just racking up interest.

Is £500 credit limit all your eligible for? You can even find some for up to 23 month interest free. Use a comparison site so that you can see your best option. And they usually tell you if you're pre-approved that way you won't mess up your credit rating.

Thanks for your reply. Yeah I think that's what I have. The woman told me it was 0% on purchases for 6 months, so until Oct.

Yeah 500 was what they've given me with Capital one as I do have a bad credit rating.
Shall I use the £500 credit limit, pay my JD with credit card. Clear credit card before October.
And then after that, pay another £500 off JD using credit card, thus paying credit card at better interest rate of 34.9%?
They should give me an increase by then too to hopefully pay most of the JD Williams account off.

Hope this makes sense, thank you

Better still, stop using a credit card.

Ask your bank for an overdraft to pay off the JD Williams debt and pay back the overdraft instead, at a lower interest rate.
Once you've done that, ask the bank to remove your overdraft.

@Justkeeppedaling

Better still, stop using a credit card. Ask your bank for an overdraft to pay off the JD Williams debt and pay back the overdraft instead, at a lower interest rate. Once you've done that, ask the bank to remove your overdraft.

I only got the credit card out last week to try and use the 0% for 6 months to clear my JD account. I applied for an overdraft a few years ago and wasn't accepted, not sure if I'd be different now. I'll have a look to see. Thanks for replying

You can do just as you've said. Pay the £500 off you JD and then pay off the credit card before the 0% expires.

@ISayItLikeItIs

You can do just as you've said. Pay the £500 off you JD and then pay off the credit card before the 0% expires.

Ok brill. So even after the 0% expires, is it still worth using credit card at 34% to pay off the remainder of the JD account which is roughly 69%? Sorry just wanted to clarify as I find these things difficult! Thank you

How much do you spend in the shops on food, petrol etc per week?
Firstly I'd look at what else you can cut back on expenditure.
Then, I'd use the credit card to purchase food, petrol etc for the next month being careful to spend LESS if possible than I'd normally do, no buying clothes, household goods, make up, coffees, books or magazines etc and being sure not to spend more than the £500 limit.

Then, put aside money to pay off
a) the minimum payment due on your new credit card against what you just spent. Make sure you pay it in by the due date or they'll slap interest on the whole lot and you'll loose the interest free.
b) the amount you spent on shopping for food/petrol/essential goods on the new credit card - use this to pay a big chunk off JD Williams.
c) the amount you'd normally pay off the J|D Williams card each month - pay this off JD Williams
d) any extra money you didn't spend, use to pay off JD Williams.

Then the following month, use your credit card to spend up to it's limit when shopping (it won't be as much given you only paid the minimum payment off last month.

Use that amount of food/essential shopping you spent on the credit card to pay off JD Williams
Pay in your normal amount you'd pay off JD Williams.
Obviously this month, as you reduced the amount owing JD Williams, there's less interest added, so paying as much as you can off JD Williams this month means you're repaying and not just paying back interest.

Keep going and you could very likely reduce the JD Williams to zero before your zero rate with the new credit card finishes.. Then see if you can get a second credit card with 0% on purchases, or even balance transfer. And use the 2nd card to pay down the first, all the while minimising your expenditure where you can. Till eventually you'll have paid it all off

Well done for facing into this as for asking questions that others might find basic - it is really really hard to start these things and much easier to bury your head in the sand so amazing to read you are trying to be proactive.

There are credit card repayment calculators available, if you Google it and you would see the difference between the length of time to repay based on the interest rates but you are correct that it would be better to have a balance on a 39% Apr card than a 69% - However there are other things to consider.

When you transfer you normally get charged a one off fee for doing so, you need to factor in this charge when working out the best option.

It might still be worth speaking to your bank, explain the situation and they MIGHT be able to advise you/arrange a loan or overdraft.

Depending on your home situation you could also explore the option of a repayment plan, this can 'damage' your credit history for up to 6 years but it can be a better option than struggling, getting nowhere for two or three years and then defaulting

I'd really recommend looking at a website called debt camel, run by a former CAB advisor, it's not trying to sell you anything.

Other options include speaking to stepchange, especially as it sounds like there is more going on than just this credit card.

Well done and although it's hard, you can change your life for the good by doing this.

I've just looked on jd Williams website. The interest rate is 39.9%. Are you sure that you pay 69.9% as this seems very high.

Just be careful about the credit cards as in the past I was taking out a credit card to pay another then racking up new debt on the old card. You may not be like me but you have to be very controlled. I ended up with debt on four cards and had to take out a loan to pay it off. The bank would only lend me the money as long as I closed the credit cards which I did. I do use PayPal credit now where it's 0% for four months and am careful not to buy too much. Good luck

You can do just as you've said. Pay the £500 off you JD and then pay off the credit card before the 0% expires.

And then cut both cards up. Credit cards are evil (JD card is a credit card too), and should be banned IMO. Hire Purchase was a much better idea for people who can't afford to buy things outright.

@Justkeeppedaling

You can do just as you've said. Pay the £500 off you JD and then pay off the credit card before the 0% expires.

And then cut both cards up. Credit cards are evil (JD card is a credit card too), and should be banned IMO. Hire Purchase was a much better idea for people who can't afford to buy things outright.

Agree!

@OP

Ok brill.
So even after the 0% expires, is it still worth using credit card at 34% to pay off the remainder of the JD account which is roughly 69%?
Sorry just wanted to clarify as I find these things difficult! Thank you

I would say yes because the interest rate is lower. As mentioned above it can be a cycle so pay it off and then if you can close them.

Good luck x

@Justkeeppedaling

Better still, stop using a credit card. Ask your bank for an overdraft to pay off the JD Williams debt and pay back the overdraft instead, at a lower interest rate. Once you've done that, ask the bank to remove your overdraft.

Don't do this. All overdrafts have an interest rate of 40%, which is higher than the 34.9% and 0% credit card. Plus overdraft use is detrimental to your credit history, while responsible use of a credit card is positive, plus can be a free way of managing cashflow if you put some of your normal expenditure on it (eg grocery shopping) and pay it off in full every month.

OP, your credit card paperwork should set the terms out of the interest rates clearly, so have you got these?

It will have two boxes, one with standard interest rates and the other with any promotional rates, so will say there if you do have a promotional rate of 0% until October. So definitely transfer the JD Williams balance to that.

Then pay off as much as you can. If you don't think you can clear the balance, you might be able to get another balance transfer so have another look in August/September.

Definitely also review your finances so you don't need to use credit for things like this.

IMO it's better to owe the bank than to owe a credit card. Banks are much more on the ball about credit limits etc, and psychologically, for me at least, it's easier to run up a credit bill than a huge overdraft.

People don't seem to see credit card bills as debt. So many people just pay off the minimum each month whilst they keep using the card to pay for things they can't afford. It's harder to do that with an overdraft.

If you can't afford to buy an item, save up until you can.

Hi OP,
I think you would benefit from speaking to a debt advisor at Stepchange or CAP. (Free charities - don’t pay!).

You seem to be talking about making the minimum payments on one card by using another. Both cards will then accumulate interest while you (I assume) make a much lower minimum payment of cash on the second card. If you aren’t paying enough off your debts they will grow rather than shrink. Please take some professional advice to avoid getting into a debt spiral.

Thank you all for your advice about the situation.
I don't seem to get notifications for mumsnet.
A lot to sit down and think about so thanks all. I'll reply properly to the questions in the morning when I'm hopefully a bit more focused! Thanks