Look, I hate to preach here, but PLEASE consider this. Only borrow if you are going to cancel, not cut up, the cards OR you are absolutely guarenteed not to run up the debt again. You will end up with a loan, and be back at square one in 18 months if thats not the case..
Hi, I have never taken out a bank loan before, but I'm looking for ways to reduce the interest I'm paying on my credit card debts. I bank with FirstDirect and their usual loan rate is 9.9% APR. (Rather high, I know.) I'd be looking to borrow £10,000 to pay off credit cards which charge a higher rate than that (average approx 15%APR). Here are some questions:
Is there any advantage to getting the loan from my usual bankers (FirstDirect), who I have been banking with for about 10 years and with whom I have proved reliable and responsible in the management of my account (dispite the rather high 9.9% rate)? I want to avoid too much detailed disclosure of my financial circumstances, and I want to avoid securing the loan on my house if possible. They saw fit to give me a credit card with a £19,000 credit limit (which I never use due to the high APR), so I'm hoping they's use the same reasoning to give me an unsecured loan of half that amount.
Or are bank loans always secured loans?
What, if any, are the main DISadvantages of bank loans? Lack of flexibility, and being tied to repaying a fixed amount of capital each month seems to be one, but are there any typical adverse terms and conditions that one should be wary of?
How much information do banks typically want out of you when you apply for a loan? (That is, in addition to information they can readily access regards my account with them)?
Thank you for any info.
Hank
first do any zero percent balance transfers if possible. abbey charge 7.9 percent so that is a pretty common sort of value, see if you can nudge your bank to that. the least hassle is nice, but not cheapest usually. the fixed payment with an end in sight is a good thing I have found. look to the shortest possible time scale 18months 10000 is 880 a month.
Mrcheerful
Have you looked in the loans section when you are logged onto internet banking? If you click on apply, personal loans, you should be able to see how much they will provisionally lend you and at what APR. They are currently offering me 6.9%, I would certainly never take a loan out with them at their standard rate.
I'd be looking to borrow 10,000 to pay off credit cards which
It's good advice, thanks. My credit card debt seems to have hovered around the £50,000 mark for several years. I plan to get a steady job' soon, so I can wittle down the debt. But I'd still like to minimise the interest I'm paying. Can't afford to pay off much capital untill I land the hoped-for steady job.
Hank
Yes, I always do that when possible. Trouble is, this is usually only available to newly-opened card accounts, and I have already exploited that to the max; I don't think there are any card-issuers left that I don't already have cards with who would give me much credit. My credit rating isprobably not that good since I lost my steady job, I have only been paying the minimum payment on all my cards each month.
I owe about £50,000 on cards. A good portion of that is on a good rate, such as 5.9% for the life of the balance. But about £10,000 is on higher rate cards. One of them will go up from 3.9% to 27% if I don't pay it off by May. I often juggling of balances to take advantage of balance transfer rate offers, but card companies typically charge a 3% service charge on balance transfers now.
Hank
I didn't see that when I logged on this morning. I will look again. What I logged on this morning, I found an 'apply for loan' link which took me to a form asking me to divulge a lot of sensitive information, such as my income, and how much I owe to other banks etc.
Their standard rate is 9.9%. How did you get the 6.9% offer? Is the standard rate usually negotiable? If so, does successful negotiation depend on having had a lower offer from another lender?
Hank
Typical credit card interest rates are 2% a month. You can afford to pay £1000 a month interest with no steady job?
No, I'm not charged anything like 2% a month. I hope it stays that way, otherwise I'd have real problems.
Hank
Many people are.
What interest rate do you pay, who's the provider ?
DG
It isnt the interest that would be the problem, it would be the minimum monthly payment.
I hope you`re doing your sums correctly to check that you`re saving money by transferring the balance, that 3% can make a VERY big difference to whether it`s a good idea to do it or not.
Do you own a house, or have any other significant assetts?
"John Boyle" wrote
If it were MBNA, the minimum payment *is* just "interest + 5". [ + payment protection premium, which I assume they didn't take out 'cos it's a rip-off.]
When I click on "apply for" then "personal loan", the first page which comes up says "we will lend you xxxxx today at a preferential rate of 6.7% APR (not 6.9 like I thought). I have had a loan with them previously, perhaps this makes a difference.
Sorry, I can't really help there, I haven't negotiated with them or even asked for a loan (I don't want one!). They just write every now and then offering me one, and I can always see on internet banking how much they are prepared to lend me.
Why not just give them a call?
Snuggles
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