Credit Card Debt - Am I okay?

[ElleBelleLou]

Hello Mumsnet

I am wondering if I can speak to like-minded / knowledgeable people and hopefully take a bit of weight off my shoulders.

I have some credit card debt, outlined below (at the minute all 0% interest still but that will change - I need to check dates etc)

Halifax: £2800
Lloyds: £2040
Barclays: £195
M&S: £1950

Built this up over lockdown due to a reduced salary (furlough, no bonuses etc), needing to move from furnished to unfurnished and other life issues.
I have not added to this debt aside from a few unexpected events meaning I sometimes need to put something on a credit card - in which case I use the Barclaycard and usually pay it all straight off soon as I can.

My current total credit card debt is: £6985

This is how it's reduced since January (I don't have the log for what it was before but it never reached over £10,000)
January - £8470
February - £8232
March - £7760
April - £7220
May - £6985

I make sure I pay off more than the minimum payment each month and any spare money goes towards paying off these debts. I am just worrying I am not making enough progress with how it's reducing each month.

Would a debt consolidation loan be a good option for me? I feel like this debt is a huge weight on my shoulders and I would LOVE to just be able to get rid of it - currently I am paying I'd say an average of £250 to £300 a month off (depending on my circumstances), so I predict another 2 years to pay this off fully.

If you were in this situation, would you feel okay? Should I be more stressed? Carry on as I am? Consolidation loan?

Thank you for any replies / advice

For me it depends on your income. A £10k debt is nothing if you're on £500k a year, but huge if you're on £30k.

That said. It's not costing you anything, so as long as you continue to pay off (well done btw!) it will diminish. I also would hate having more than one, but if you get a loan to cover them, unless it's at 0% it will end up costing you more. Think about it as paying for the convenience of only having one debt.

So I would say stay as you are and monitor the 0%.

Good luck!

@tentinginmarch Ah of course - that context could've helped!

I am on £28.7k - paying £600 in rent, £100 council tax, around £200 with all my bills then just food and travel on top of that. I earn about £1700 a month.

I suppose that's why I am so worried about it - the amount of pay off would be much better in my pocket with my lower salary and higher outgoings, but I need to clear the debt - I don't think I could physically afford to pay off more than I am.

I suppose with the loan I do worry as well, my credit score would take a hit as it would be yet another application, the advice just seems like it would be the right thing to do in my situation with multiple debts!

Debt consolidation seems unnecessary. Find out which one ends first and put most money towards that and try and get it paid off before it ends. Then the next after that.

How soon do the 0% periods end? Is it possible to pay it off before then? If not then you move to paying off the one with the highest balance first.

@LadyDanburysHat the 0% interest periods end from November this year to September next year - Barclaycard one ends in November and the others are all 2024.

At the minute I am paying the full amount off Barclaycard (if I have had to use it that month), then paying money off the others based on how much I've had to put towards the Barclaycard, as long as it's above the minimum payment

Carry on as you are as long as your 0% interest lasts. Then try to transfer to another card with 0% . Don't get a loan charging interest unless you can't get another 0% deal when your current deal ends. If it comes to that it might be worth thinking about as credit cards usually have high interest rates

I know it's scary having it hanging over your head, but you will have the Barclays one cleared next month, then you can concentrate on the next one. You might not clear it all in the 0% phase, but you could get a lot done. And although it's not great to pay interest, it really wouldn't be good to affect your credit with a debt consolidation loan.

Maybe see if there is a way you can earn some extra money in the short term to boost what you can pay.

If you can pay off extra every month I wouldn't change to a loan unless your interest free is ending. Pay off the first to end first of course. Can you take extra work to reduce it further

Can you pay off BC then balance transfer to one card with a long interest free period? NatWest have one at the moment with no fee . It would make me feel easier to have it all in one piece with only one day of interest and payment dates to remember

@Absolem76 Thank you for your advice :)

@LadyDanburysHat Thank you - I did used to work a part time job in a bar which helped but it became unfeasible with the amount of hours in my day job - I can definitely look into selling some things online though so that's put that idea in my head, thank you!

@gogomoto Thank you for your advice, seems everyone is on the same page as to what my actions should be

@UndercoverCop I was considering that, but I worry that applying for another one with a 0% longer etc would impact my credit score negatively due to yet another credit agreement. I also think I would feel worse having it all on one and seeing the higher numbers rather than seeing the smaller numbers spread across them all - which I know is completely daft!

Sounds like you are doing a good job to me - reducing your debt when the cost of everything has gone up.

It looks like you have paid off £1500 in 5 months so £300 odd each month on average.

It might be that as your existing cards reduce that you are eligible for balance transfers with them either 0% offers with a fee or low rate offers. You might get offers in the post or when logged into your app or website. Remember to check how much you can move as your credit limit might mean you move part of a debt if it doesn't all fit on a card. Better to have 1k at 0% and 1k at 27% than all at 27%

You do need to keep track of when 0% offers end as if you don't a lot of what you are paying off will end up just going towards interest. Take a close look at your statements (which should be available on the app or website if you don't get paper statements) each balance transfer should be listed against your card including how much is left to pay on that balance transfer, the interest rate you are paying and when the offer/promotional rate against it runs out.

I think you also need to be prepared that there might be the odd month you don't reduce your debt e.g. an annual insurance renews or you need to replace your freezer etc. That is OK but will set your debt free date back a month. Sometimes it can't be helped.

Good luck you are doing a great job - just get organised to keep them on low rate offers.

You need to take each card separately.
Look at the number of months that each card’s 0% interest ends and divide the balance by that number EG Halifax Card 0% interest ends in December ‘23, 6 months. Current balance is £2800 so you need to pay £467 each month to pay it off. Do the same for the remaining cards.
This will tell you how much each month you should be paying.
However, if you are not able to pay this amount, then you need to find out what the interest rate for each card will be once the interest periods end. Most go onto a really high rate, so paying off as much as possible now is vital unless you want to be lumbered with these cards for ever.

We have very similar income/outgoings and I aim to save £250 a month so I think you are doing well as you are basically using that as your repayment instead. Agree with others to tackle the one that the 0% ends on soonest but other than that I would just keep plodding on, well done!

Go to your bank and ask for a quote of how much it will cost, APR, monthly amount and how long the loan would be for.
You need to balance out the fact that the longer you have the loan for - the more interest you’ll pay - but it will be a lower monthly payment the longer you take the loan out for.
If you have a mortgage you could always speak to an advisor about adding this to your mortgage and you’ll probably get a lower APR as the debt is secured.

Don't consolidate if you have 0% offers available to you, it makes no sense to pay more in interest and it will make you feel like you can spend on the cards. You are doing well, just keep at it!

If you're on 0% and paying stuff down as you explain then you're in the right place.

If you can keep on 0% via new offers as deals end then just keep plugging on.

Were, as one might expect, 0% deals to be tight and thin on the ground then you might need to think about best deals to consolidate in one place albeit that's kicking can down road territory. If that happens make sure you understand what the deal is if you can manage to pay extra either one off or monthly.

Many years since I wanted a personal loan but ISTR there were bear traps.

Sounds like a decent plan. Keep looking for 0% deals with fees as low as possible and roll the debt over while you still have debt.

0% offers have been around since before 2007, ie before interest rates dropped so its not a given they'll go away now they've risen again but obviously might do.

What were the 'unexpected events'? If they were things like car repairs or white goods replacement then make sure you save for this sort of thing once you're out debt.

Having credit cards does not negatively impact your credit score. It is, in fact, the opposite, particularly if you pay on time and never miss a payment. It shows the financial institutions that you can be trusted with borrowed money, caus eyou pay it back on time.
Once the Barclays card 0% ends, close it. Full stop. Then carry on making payments on the others, focusing on the next one to finish, so that that debt can be as low as possible.

Then just get another balance transfer 0% card, and transfer the balance on one, maybe 2 of the other cards, depending on when they finish their 0%.

Then pay the minimum on that while paying off the 3rd card.. If need be, just get another 0% balance transfer one.

Ive been doing that for years. I have about 5 or 6 CCs, though I only have a balance on the current 0% one.