10.5% apr is still quite hefty, although yes, it's better than what you're paying at the moment. However it's likely not to allow you to overpay, which means that you'll end up paying all the interest on it even if you start earning more and paying off more every month. You should be able to get a personal loan for about 7.9% from someone like northern rock.
check moneysupermarket.com for best rates.
Alternatively, consider an egg flexible loan - about 7.9% I believe, but allows overpayments with no penalty.
Or, since it's not masses of debt in the first place, consider if you're organised enough to play the 0% credit card game - you need to transfer balances every 6-9 months to make it worthwhile though, as the rates go up sharply. Or M&S do a credit card that offers you 4.9% for the life of any balance transfer, which is good for people (like me) who suck at remember to get new credit cards.
So the short answer is - yes, it could be a good idea for you, but you could probably do better than what the bank is offering.
killtest asked me to look at this. I second what littlemissk says. Try to get good deal on a credit card (say 0% plus 2% initial transfer fee) then--and this is the important bit--focus on paying it off ASAP, before you start being charged interest. This is assuming your credit score is OK, which, if you're currently paying interest, it probably would be.
If you think it will take some time to repay, get a low Life of Balance Transfer card, again, as littlemissk suggests.
Do not take a loan where you cannot make additional repayments. I know someone who has one of these from Worst Direct, and it can only be paid off if you crush the whole balance in one go.
Oh cheers - are you someone who Knows What He's Talking About then? :-)
The main drawback with the 0% on balance transfer credit cards is that the majority of my debt is in my current account, not on a credit card, so I don't think it would count as a balance transfer. I'll shop around and look at the loan option, and maybe I can transfer my c/card balance to a 0% card.
Say thanks to killtest for me too. And nice to hear from you after he's told me so much about you :-)
It sounds like a great idea, I'll certainly look into it for my credit card balance. Not sure if I can do it with my overdraft though. And I'm also slightly concerned that I lack the organisational skills to remember to swap and change every 6 months!
Go for the 0% credit card first. (If can't transfer current account debt to it, transfer from current credit card to top up bank account, then swap the whole credit card debt over?)
Basic issue is that a consolidating loan is going to restrict the speed at which you could pay off the debt, and lower interest but over longer time may end up more money in total. I reckon it's not very much debt so you could probably pay it off within a couple of years - not the 5 years a loan would probably be (minimum). Look for simple ways to save a few hundred quid painlessly: stuff like stopping getting takeaways, swapping electric/gas/mobile phone contracts, blah blah. Then put all that money saved into your debt repayments - and if you've got any savings use them to pay this off, as you won't be earning enough in interest to make up for the cost of this debt.
I second moneysavingexpert.com (and moneysupermarket) - credit card providers are being a bit harsh about 0% rates these days, so best to research deals fully before going for them.
Comments 24
check moneysupermarket.com for best rates.
Alternatively, consider an egg flexible loan - about 7.9% I believe, but allows overpayments with no penalty.
Or, since it's not masses of debt in the first place, consider if you're organised enough to play the 0% credit card game - you need to transfer balances every 6-9 months to make it worthwhile though, as the rates go up sharply. Or M&S do a credit card that offers you 4.9% for the life of any balance transfer, which is good for people (like me) who suck at remember to get new credit cards.
So the short answer is - yes, it could be a good idea for you, but you could probably do better than what the bank is offering.
Reply
If you think it will take some time to repay, get a low Life of Balance Transfer card, again, as littlemissk suggests.
Do not take a loan where you cannot make additional repayments. I know someone who has one of these from Worst Direct, and it can only be paid off if you crush the whole balance in one go.
Hope this helps!
Reply
The main drawback with the 0% on balance transfer credit cards is that the majority of my debt is in my current account, not on a credit card, so I don't think it would count as a balance transfer. I'll shop around and look at the loan option, and maybe I can transfer my c/card balance to a 0% card.
Say thanks to killtest for me too. And nice to hear from you after he's told me so much about you :-)
Reply
Don't believe everything killtest tells you, will you? ;-)
Reply
Reply
Reply
Reply
Reply
I can give you tons and tons of advice, 'tis my job after all.
Reply
Reply
Reply
Reply
Basic issue is that a consolidating loan is going to restrict the speed at which you could pay off the debt, and lower interest but over longer time may end up more money in total. I reckon it's not very much debt so you could probably pay it off within a couple of years - not the 5 years a loan would probably be (minimum). Look for simple ways to save a few hundred quid painlessly: stuff like stopping getting takeaways, swapping electric/gas/mobile phone contracts, blah blah. Then put all that money saved into your debt repayments - and if you've got any savings use them to pay this off, as you won't be earning enough in interest to make up for the cost of this debt.
I second moneysavingexpert.com (and moneysupermarket) - credit card providers are being a bit harsh about 0% rates these days, so best to research deals fully before going for them.
Reply
Leave a comment