I’m shit with money, need some advice about credit card debt please!

[Mousehoel]

I have a 0% interest credit card with £5000 on it (I’d hoped to have a big chunk paid off by now, but COL and me not understanding the credit card very well means I still need to pay this off).

The 0% interest is coming to an end later this month, so most of my monthly payment will be covering interest. It’s going up to 21.66%.

I pay £75 per month off the credit card.

I also have an overdraft of around £2000, which (I’ve just added up now and feel a bit sick as I didn’t realise) costs me around £62 a month in daily overdraft fees.

My financial situation isn’t amazing, but should improve from September, and I’d like to prioritise getting rid of these debts.

As far as I can see I have three options:
1 scrimp and save, keep going with current credit card, pay off what I can when I can and pay loads of interest.
2 Change to a new 0% credit card, and keep the overdraft, pay off what I can when I can.
3 Get a personal loan of £7000, pay off £140 each month and more when I can.

Like I said, I’m shit with money. I’m completely out of my depth with this and would love some advice!
Thanks in advance 🙂

Weird! Assume it is somehow based on your credit score then.

OP on that basis Id do a couple of “soft” applications based on the MSE list that says what you’re likely to get and check what the % min payment is for each.

@Mousehoel why would you need to change your bank account? Who has advised you to do this?

@Mousehoel if they are talking about having to change bank accounts that sounds more like an IVA type agreement. Which I would avoid like the plague if I were you.

Lot of good advice here. The other thing I'd say is definitely take a look at your other monthly outgoings and try to identify stuff you can live without or cut back on, even just for a short time (subscriptions, haircuts, clothes etc.). A tight six months could save you years of pain. Step change budgeting should help with this.

Something similar happened to me some years ago when exH and I split up. I went into the bank and took out a personal loan with them at a reasonable interest rate, and used that to pay off all other debts. They also suggested that an alternative would be to take out a further advance on my mortgage, but I decided to go with the loan instead. I think it was over five years or something like that.

Ok, been on the phone for a while.
I rang Step Change, who immediately recommended an IVA, but then backtracked as I co-own my house with a mortgage.
He then recommended a personal budgeting plan, which is a sort of debt management I think, where my credit card and overdraft would be consolidated through an accountancy firm, I’d have to move my bank accounts and have reduced payments.
I was then rung by an accountancy firm, and felt very bulldozed and pushed into feeling more helpless than I already was, so have asked for time to process this.
It doesn’t feel right, if that makes sense?

I’d rather either of these options:
Consolidate it myself with a loan and pay off over 5 years, and not ever use a credit card or overdraft again.
Change to another credit card and suck up extra fees as best I can.
(Consolidating with a loan feels most straightforward, but I may be being naive here!)

Having gone through finances briefly with someone I’m not quite as shit as I thought I was, I’ve got some unavoidable high outgoings (like fuel for the car - I live in a place with little to no public transport, and family commitments that mean quite high mileage), but I’m generally on cheapest options.

A loan would cost less per month.

See if you can get a new 0% credit card with a £7000 limit. Do a balance transfer to the credit card and a money transfer to pay off the overdraft.

Make sure you don't use your overdraft again or the paid off credit card and direct all spare cash to pay off the new card.

OP might struggle to get £7k limit on a new card

Can you change to another 0%? I would do that if I were you, and then be really ruthless about sticking to a budget. The budgetmom on youtube is really helpful though US focussed.
if you add up all your outgoings and incomings each month, do you have enough to put towards the debt?
Another good message board is the debtfreewannabee one on MoneySavingsExpert

She might, but if she could get £5k she could balance transfer the other credit card and then see if the paid off card offers her a 0% deal that she could use to pay off the overdraft.

Even if she can't get enough of a limit to transfer all of the balance it would save her some interest. She would have to work out whether this or a loan would work out better.

Do not do any sort of a debt management plan, loan or consolidation, this sounds like the sort of situation that can quickly be resolved through careful budgeting. Go over to MoneySavingExpert and post your SOA (Statement of affairs) on the debt free wannabe forum, there is a format you can follow, you will then get loads of useful advice from people who have paid off tens of thousands of debt within the space of a few years.

In the meantime and until you've hopefully balance transferred the CC where the interest free period is expiring throw everything you can at that overdraft which is costing you money daily. Sell stuff on ebay and vinted, old mobile phones, clothes etc, be really ruthless.

Please remember with credit limits, most (i think all actually) will only let you do a balance transfer for up to 90% of your credit limit, not the full limit, so on a £5000 limit card you could only transfer £4500 to it.

I would not get a debt consolidation loan. Post on MSE DFW forum. The overdraft will be the most expensive debt so if you can get a 0% money transfer card that would help. Ultimately budgeting is the only way you get out of debt. Does your partner know you have debt and are your outgoings fairly distributed?

H and I separated 5 years ago.
I rely on benefits and care for disabled children (which complicates things).
However he is moving back in in September for financial reasons (we’re not getting back together), so finances should be a bit easier.

I’m going to talk to him tonight about it. He knows I have debt, the plan is to pay joint bills between us and end up with an equal sum to sort our own private bills out of, and have some left over. I am at home with dc, so he doesn’t ever have to leave work to deal with drama.

I'm sure you're not 'shit with money' just had your budget derailed by the cost of living crisis and you're overwhelmed by your circumstances.

Is DH moving in likely to be amicable? Does he have money he could use to pay off your debts? Did he pay decent child support after he moved out?

If the debts were due to you not having sufficient money coming in to pay the bills and feed DC etc, then they should be regarded as joint debts anyway and you're doing valuable work caring for DC and freeing him from the dramas that you mention, so if he has savings it's the least he could do.

Going forward you should be able to stay out of debt as you're not trying to run two households.

In the meantime look up 'breathing space', it might free you from interest, charges and hassle from creditors until you get things sorted with exDH moving back in.

H moving back in is amicable, but I will need lots of space 😬
We get on, but he is one of life’s talkers. I crave silence. Him being here will share the caring load in the evenings though, and I have some design/creative plans that I will be able to focus on most evenings which will hopefully pay off at some point 🤞

He paid minimal child support but always shared costs if (for eg) my dd at uni came home and needed train tickets etc.

He does have some savings but won’t touch them (he has form for nearly dying so always has a bit of backup just in case!).

I could make a case for my debts being joint, but I know him well enough to know that he won’t understand (he would happily live on baked beans if he has to and would spend whole evenings in the dark so he didn’t use any electricity, so likely sees my debt as frivolous unnecessaries, and it’s just not worth going there!), so moving on I’d rather make a plan that means I rely on myself, and can work on being financially independent at some point.

Having gone through my budget yesterday I’m not quite as shit with money as I thought I was, but I do have a “fuck it” attitude and impulsiveness that means I buy before I think sometimes, so I think for that reason I’ll cancel Amazon prime! It’s a bit too easy.

I am going to make a case to H that the fuel in my car should come out of the joint pot, as 90% of the journeys I make are child related. I don’t think it’s fair that I foot the bill of £60+ per week when he has free use of a work van.

I’ve found out that I can earn up to £139 a week (£556 a month) on carers allowance, so I will do that which will help massively, and hopefully will allow me to pay off the credit card and overdraft quicker than I thought.

My plan now has 2 options
1 Take out a credit card covering cc and od, pay off as quickly as I can.
2 Take out a credit card to cover cc, pay off both overdraft and cc as quickly as I can.

Today I’m going to work out which would be the most sensible - probably number 2, as my overdraft fee will come down the more money I put into the account.

I’ll have a look at breathing space - even a month to get myself sorted would be helpful!

Thank you for all your lovely replies, this has been more helpful than you can know!

I don’t know if I’ve googled the wrong thing, but breathing space comes up with Step Change (and air purifiers), who I rang yesterday.

They are very keen for me to go for some sort of budgeting plan, to the point where I was rung twice yesterday after I’d spoken to them to see if I’d signed the paperwork, and when I hadn’t they were very pushy, which was off putting.

I think I’ll just work through it and manage somehow.

Do use Money Saving Expert to help you find out which credit card you are likely to be accepted for.

There are also some really useful tools on there to help you focus on clearing debts and to work out how best to do it.

Thank you!
I’ve been approved for a few credit cards, and feel much more positive that it can all be paid off within a couple of years.

could you and ex do a CAP course ( christinas against poverty) it is not religious though but they help with emotional side too, some course leaders will liasise with lenders others don't but they can help with a whole new way of thinking about budgetting and triggers for spending etc, I would priortise getting rid of overdraft as the fees are crippling can you speak to bank about getting fees frozen while you get out of debt

I’ll ask at the bank, but I mentioned this a while ago and they were keen not to, because of my credit rating.

If I work I should hopefully be able to get out of overdraft within three months, so I might just ultra focus on sorting that.

if you have been approved for a few 0% credit cards then move debt and you can really start to work on clearing overdraft. certainly your fuel costs are a joint expense if for the kids or at least 90% of them before he movces back in make sure you have a written budget that you are both agreed on a set amount for food, rent utilities etc and I think a year of really frugal living to get back on track is worth it with the odd planned treat. budget for christmas I don't know how old your kids are but you can cut back, also no clothes except what is essential and then replacements only .. but don't go without a warm winter coat but you don't need 2 neither do your kids
when you budget don't forget things that are not monthly but will definitely happen MOT for your car a service it may need new tyres or brakes pads, birthdays, insurance if these are budgeted for ( sinking funds) they don't have to go on credit card

We’ve been through finances and have come up with a joint plan that leaves money for each of us to deal with our own costs, but at the moment mine includes my fuel, which I’ll talk about to him. I don’t think he understands how much he’s been able to not be involved with any of the child drama, and how much this has allowed him to work without disruptions.

The current budget allows for my absolute incomings (basically carers allowance and child benefit, as income support will stop, and if I do make a tax credit claim I don’t know what it’ll be (waiting to hear if my youngest will get DLA, which will affect the claim)) and after credit card bills etc is tight for me, but this will be solved if I work 12 hours a week, which should be doable, and allows time to be flexible for the dc most of the week.

We are generally a frugal family anyway, so there aren’t many areas we can make cuts that haven’t already been cut.
I could cut Netflix and iTunes, but would rather see if I can keep it going as I use both to wind down.