A little Financial help.

[Optimus]

Hey everyone!. I was just wondering if someone could offer a little help here. Me and my girlfriend have a catalogue. We where using it for some stuff when we were moving house and now we have got into a little rut. We have used £1000 on the catalogue, but we have brought it down and then took it back up on a few occasions. Our monthly minimum payment is now £66 and only about £11 of that is actually coming off the bill. It's crazy, and is really annoying me now. Anyway, my question is this. My bank our offering me a credit card of £1200. Do you think I should take the credit card and pay my whole catalogue bill with it?. Then every month pay £66 of it.? I'd actually be paying it of a hell of a lot faster?.

[The Rodent]

You need to check the percentage rate of the credit card compared to the debt you owe with the catalogue.


If the percentage is lower on the card, go for it. Get rid of the higher percentage debt.


Be careful though. Some of these catalogues, you run up a debt and pay so much per month... but if you decide to pay off the lot in one go, they'll charge you an extra fee.
They make their money from the percentage rate, which means if you pay it off in one lump, they wouldn't make their profit, which is why they throw in an extra fee so they at least get some profit.


But yeah, if you can do that without incurring too much extra costs, and the bank's card has a lower APR, do it.


In future, I will say, if you can't afford it, don't buy it. Loan companies, catalogues, etc, etc... they're all bastards and won't think twice about being all nice and lovely to get you to buy their product... and then rip every penny you have out of your pocket and then sending the Bailiffs round as an extra kick while you're down.

[The Rodent]

I've never used those things myself. Never had a credit card either.


The closest thing to a loan I've ever had was a mortgage about 10 years ago, then when I lost everything I had through no fault of my own (including my kids), I had to forfeit on the mortgage. I ended up declared bankrupt and had absolutely everything taken from me and ended up on the homeless list too.


So that's how bad things can get when you take out loans.


These days, I really keep a tight lid on my money.
If it's out of my spending range, I don't buy it. Which is why my internet provider is pretty poor and cheap, I don't bother with games machines and my DVD collection isn't as big as I'd like.
I also have secondhand furniture or furniture I've acquired for free from friends and relatives.

[Tacitus]

I lost my house when I had to give up work. Well, I was able to sell it before the bank sold it from under me but it took years of arguing and worrying before all the debts were cleared.

My advice would be to ask them if there's any rebate for settling the bill in full (companies often wave a percentage of the interest) and then go to your bank asking for a loan for that amount. I'd avoid credit cards like the plague...

I've got a lot less money these days, but am a lot better at spending it. If I want something expensive I save - The 10% rule works brilliantly. Save 10% of all money coming in, even if that money is a £20 cheque from your auntie for your birthday. You soon get into the habit. ;)

[Yoda]

Yeah, the thing is to get the high-interest loans paid off as soon as possible. If you can pay off one for another with a significantly lower rate, that's almost certainly going to be an improvement (though make sure the new one doesn't ramp up to an even higher rate after awhile). High interest loans need to take priority over basically everything else other than necessities, or they can get out of control quickly.

The total balance the rate is being applied to is the thing. Zoom right by the minimum payment--it's just there to make it more inviting to carry a balance from month to month and rack up more interest. It looks like the bill is "paid" because they don't ask for anything for another month, but every time you make the minimum payment you're only buying the right to borrow the rest for another month.

[christine]

I bet the catalogue APR is higher than a credit card, but like Tatty says I'd try and get a bank loan for a grand and pay the catalogue off. The trouble with paying the catalogue off with a credit card is that the temptation to spend on the credit card is always there. With a loan you know the balance is always reducing.
Beware though that banks headline their loan offers around 5% APR but if you're only borrowing £1000 that's a small amount to them so you might end up paying as much as a credit card. I've just looked at Natwest and they charge 22.9% for a 1K loan , but only 6% for one of £7k.
Shop around for a cheap credit card, apply for it, when you get it transfer the balance to that, chop the card up and chuck it, then pay off as much as you can every month. Then close the account.

edit - Tesco clubcard credit card is 18.9% APR

[christine]

or if you fulfil this criteria:
You must be at least 23 years old, with an annual income of at least £16,000 & have a good credit history / no CCJ's.

you could go for one of these new peer to peer loans from http://http://www.zopa.com

a £1000 loan over 2 years will only be 10.9% APR , repayments £46 a month

[Optimus]

Thanks everyone.

Christine, that link above isn't working?.

[christine]

Sorry it should be
http://www.zopa.com

There's also an article here about peer to peer lending as there is other companies

http://www.moneysupermarket.com/savings/peer-to-peer-lending/loans-guide/

[Tacitus]

Credit Unions are good. My sister has used them in the past, both to save and borrow.