5k debt

[willithappen]

Hi,
So I'm in about 5k of debt at the moment across overdraft and credit card. I need to try get this clear asap and get things on track for myself otherwise I feel I will continue to be in debt. I hoped I'd be out of this spiral by age 30 but with that birthday just having passed and no sign of being clear anytime soon I'm getting very anxious
I'm on maternity pay at the moment so not getting a whole lot income in
Credit rating isn't great, because of the debt so I can't get a consolidated loan (this would help massively!)
Constantly paying the interest on the overdraft and card means any disposable income is being taken up there and I'm never getting out of it. I have been in my overdraft that long now that I'm sure the £50 interest fees im charged every month would have built up to cover the actual overdraft by now 😭

Is there any way out?

Can you get a 0% or low percent credit card? And balance transfer the debt. Set a monthly DD and just pay it for a year/18 months while your credit improves. Then transfer to a 0%

Debt consolidation loans are rarely a good idea anyway as they tend to just extend the payback period (and leave plenty of scope to build further debt along the way - bitter experience!)

P.s. accepting it might take a while is also key! Looking for the quick solution often leads to a further debt spiral.

I'm unsure I could get one that would cover the 5k but could look into it. I think I did do a compare on Experian but wasn't being offered much more than 500 for the cards at the moment :/

yes, the trick is to get yourself 0% credit cards and put the debt on that.

Even if the only card you can get is an Aqua card that will give you £1000 on 0% for 6 months then take it and at least put the £1000 on it. After 6 months you should be able to get a slightly better/longer deal so you can put the debt on that.

Keep going until every penny of your debt is on 0% and then start paying them down using the snowball method.

It was a really lovely feeling when I managed to switch all my debt to 0%. At least now I know that every penny I pay is covering the debt.

There's a 10 a day thread in money matters. I followed it when I was stuck it may help clear some of it but like others said there is no quick fix for that level of debt it's about slowly getting it down

I had the exact same issue - I would have been able to pay off the debt if the money wasn’t all going on interest. I have £2000 overdraft and £2000 on credit card. I used Money Supermarket to see which 0% balance transfer cards I would be able to access and it tells you whether you’ll be approved before applying. I have got a Barclays card, and have just transferred the balance over to that. It’s 0% for 24 months, so my plan is to just leave it there for a year while I pay off my overdraft.

I am going to pay off £500 of my overdraft and then switch to a nationwide account that gives new customers £100 when they join and offers 0% interest on transferred overdrafts for 12 months. The limit they could give me was £1500 though - hence why I need to pay a bit off first. The £100 will go straight into paying off the overdraft.

Goal is to pay off overdraft within a year and then pay of credit card following year.

the really annoying thing is that I could have done this ages ago, and probably have it paid off by now, but I’ve kind of buried my head in the sand about it. It feels really good though to have started to get more control and take positive steps.

@Rosit thank you for explaining that because that really helps.
I think I can get a £1500 0% one for a few months so wondering if it's worth doing that and putting some of it on there. In my head I was thinking I needed the 5k outright on one card otherwise it would be pointless

Gutting I can't get a Tesco or sainsbury loan because their interest rates are so small

You need to be really careful that once you do a balance transfer from Card 1 to your new 0% transfer card that you don’t then gradually end up back at £5k on Card 1.

Been there, got the t shirt and now have £7k debt instead of the £5k I had at the point I got the second card to do the balance transfer.

Only you now how disciplined you’ll be about this.

Definately take advantage of the £1500 at 0%.

Thats almost a third of your total debt on interest free. Then in 3 months time start looking for others offers - they will gradually improve.

Definitely get £1500 at 0% and then just pay the minimum payment every month off that card for the duration of the 0% whilst you are paying off more expensive debt. Pay the maximum you can each month off the debt with the highest interest rate whilst making the minimum payments on the others. Once that debt is cleared, make the maximum payment you can on the next highest debt until that has cleared and then keep going until all has been cleared. Really look at all your outgoings as well and see if you can make any cuts that would enable you to pay off any more of the debt sooner.

If you are worried you might end up getting into more debt by spending again on the cards/overdraft you have cleared then ask for the limits to be lowered once you have cleared a certain amount so the temptation isn't there. Just be mindful though that doing this can actually have a detrimental impact on your credit rating as you will maintain a high % of available credit in use.

Clearing debt is tough (I've just finally cleared over £10k of frivolous credit card/overdraft debt), but taking stock of where you are and making a plan to get out of it (and sticking to it) is definitely the first step. Best of luck.

Can you put an overdraft on a credit card?

Hello - just dropping in here quickly to say that we’ve got a Q&A live in Money Matters about debt with debt charity Stepchange. No question is too stupid - so don’t hesitate to ask the experts about any aspect of debt or managing money worries.