# Key Post: Getting out of credit card debt



## AAMbeginer (24 Sep 2001)

What's the best way to clear your credit card debt?
I owe copious amounts of money to the credit card company and I have mortgage and car loan too. Interest on the credit card is a killer. Where am I likely to get a loan to cover outstanding debt? Any other advice?

*  Please add advice and useful links about getting out of debt to this thread * tedd


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## CM (22 Oct 2001)

*MABS*

A useful link in this context is the Money Advice & Budgeting Service (MABS).


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## amsmtg (23 Oct 2001)

*Another useful link:*

The Motley Fool have some advice about debt:

www.fool.co.uk/debt/debt.htm

I found this very useful, you may have to register first though!
There is a "snowball" debt calculator which is really good.


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## tedd (9 Sep 2002)

*Re: Advice about getting out of debt*

<!--EZCODE BOLD START-->* Liam says:*<!--EZCODE BOLD END-->
If your mortgage lender will do a top-up on your mortgage at homeloan rates with no fees, that's an option (First Active Utopia springs to mind). But don't fall into the trap of borrowing over a longer term than you need. If you can afford the repayments, take the top-up over a term of 5 years or less NOT for the same term as the rest of your mortgage. If your lender insists on legal and valuation fees for a top-up, have a look at re-financing the entire mortgage. 

<!--EZCODE BOLD START-->* Joe Public says: *<!--EZCODE BOLD END-->
There's one source of finance that's even cheaper than a mortgage top-up - MBNA's introductory credit card rate of 3.9%. Provided you think you can clear down your existing debt over six months, this might be the answer.

<!--EZCODE BOLD START-->* garrettod says: *<!--EZCODE BOLD END-->
In addition to MBNA, there are other Promo Rates out there:

Ulster Bank have a credit card with a promo rate of 3.9% for balance transfers - first 6-months.

Tesco Visa offers a Promo Rate of 5.9% (?) for 6-months on balance transfers.

AIB offer a Promo Rate of 6.9% on balance transfers for 6-months.

I suggest that each time a new account is opened, the full balance be transfered, the old account closed, the new card be cut up immediately, a standing order be created for 6-months, covering whatever amount you can afford to repay (min being 5% of bal outstanding).

By setting up the standing order for 6-months at a time, you can chip away at the balance outstanding, ensure you cover interest payments (& avoid additional charges), while managing your other debts.

Use a diary system to monitor your progress & remind you to transfer your balance again after the 6-months 

stop using your credit cards - with No exceptions 

But there are two big pitfalls - if you run up new debt, MBNA will charge interest at 16.9% (the 3.9% applies only to balances transferred from other cards); and if you don't pay down the balance within six months, the rate of interest on everything jumps to 16.9%. 

If you go this route, it might be best to cut up the new MBNA card as soon as you receive it and just keep chipping away at your outstanding balance. 

<!--EZCODE BOLD START-->* tedd says:*<!--EZCODE BOLD END-->
Look at the rate of interest you are being charged on loans and credit cards. Pay just the minimum payment on the cheapest ones and put the rest towards the loan with the highest interest rate, so that it gets paid off first.

<!--EZCODE BOLD START-->* sarahmc says:*<!--EZCODE BOLD END-->
I know, I know it makes fiscal sense to attack the loan with the highest interest rate first, but personally I attacked mine smallest outstanding amount first.

It gives a real buzz to be able to tick one loan off the list and move onto the next one.


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## tedd (9 Sep 2002)

*Re: Is declaring bankruptcy an option?*

<!--EZCODE BOLD START-->* US/UDS says:*<!--EZCODE BOLD END-->

Don't do this. Only one of your unsecured creditors can be first in line, and the others won't like the idea that someone else is getting paid before they are.

Draw up a realistic earning and spending budget, and work out what is the maximum you can put to debt repayment each month. Be tough with yourself, but be realistic about what level of debt repayment you can sustain. Keep up the payments due to your secured creditors (though you could explore whether you could reduce these by remortgaging, or by extending your mortgage, at least for a period) and whatever is left over should be divided proportionately between your unsecured creditors. Write to them all explaining your position, sending them your budget and offering to pay whatever it is you are going to pay them. Ask if they will accept that until such time as you are in a position to improve the situation. If they have any sense, they will accept it - it is better from their point of view than bankruptcy. Some will not accept - they will write you bolshy letters. Write back politely saying that other creditors have agreed, but that if they persist in their attitude you will have no alternative but bankruptcy.

This should not do the same damage to your credit rating as a bankruptcy.

Visit www.fool.co.uk and spend some time on the "Dealing with Debt" board there. It's a UK-based site, but a lot of the strategies which they discuss for dealing with creditors and clearing debt (and just general emotional and practical support) will be very useful to you.


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## davelerave (22 Apr 2003)

*Re: Is declaring bankruptcy an option?*

you can ask your cc companies for a better rate temporarily.from my own experience of debt i'm not sure about transferring to mbna or one of them because i did for a while and i found i kept increasing the new debit balance .i got the utopia over 5yrs at 4% which is good but your home is security for the loan which you need to be careful about (they do try to get you to put the loan over the term of the mortgage as well).keep in contact with creditors as this will reduce the personal pressure that goes with debt .reduce all your unneccessary expenditure as well


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## shoegirl (9 Dec 2003)

*credit card debt*

There are only two ways to get out of credit card debt:

1.  Pay off the full amount
2.  Stop using the account until it is payed off in full.

I recommend putting your card into a bowl of water and sticking it in the fridge.  So you really have to think about it before you use it.

Don't transfer to another provider as they may increase your credit limit and so plunge you further into debt.


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