Paying minimum payments on your credit card? Feel you are being charged high rates of interest on loans, credit cards or paying bank overdraft fees? Not sure when you will finally pay off a debt? Then a debt consolidation loan could be for you. However this only makes good financial sense if your debt consolidation loan is a lower interest rate and will cost less in the long run. A debt consolidation loan should also leave you with more spare cash to reduce your debt even faster.
Here are a few other things to consider:
- Other lenders’ fees. Some lenders charge an ‘exit fee’ if you end a loan early, ask them about any fees or charges before transferring the debt away from a lender or to another lender. AdvanceCU does not charge admin fees and exit fees on our loans (see our fees).
- Cut your spending. See our Household Expenses article for ways to live for less. This should give more spare cash to help clear your debts.
- Anything in your future? Is there some change to your life soon that could affect your income, expenditure and your ability to repay a loan?
- Payday lenders are a warning sign. If you find you regularly resort to high interest short-term lending this could indicate that your finances are running out of control. You may need some free debt advice.
- Overdraft should be for emergency use only. Most banks now charge 39% overdraft rates. That’s about £28 interest charges every month for every £1,000 overdraft. Doesn’t sound expensive, but that is £336 per year and the debt isn’t paid off! A loan with us will cost less, you’re paying off the debt plus saving as you repay. Find out more at Money Advice Service.
- Beware minimum payments. It can take years to clear a credit card if you only ever make the minimum payment. £1,000 paying only the 2.5%minimum could take 17 years or more to clear! Check out www.cardcosts.org.uk to see how long it could take to clear a credit card by just paying the minimum payment.
- Credit History will be affected if you miss a payment or have an arrangement to pay a debt.
- 0% credit cards. Some credit cards permit you to transfer debts to a balance transfer credit card at either 0% or a low interest for a fixed period, subject to credit check. These can be a great option to help clear credit card balances at low cost.
How Advance Credit Union can help
A debt consolidation loan from AdvanceCU could help spread the cost of repaying your debts. Plus we will tell you exactly when your loan is fully paid off. We pay your creditors directly so you can be assured those debts are cleared. We may require you to then cancel credit cards or reduce your agreed overdraft to help keep your finances under control. You can borrow up to £8,000 from 12 months up to 36 months, subject to affordability and credit check.
How it works
You apply for a loan as usual, listing any credit cards or other debts you wish to clear
We assess the loan application, considering the interest rates and how much your other debts are costing you.
We will make an offer if we can see that you will be paying less
Regular Savings. Independent research has shown that saving just a small amount regularly while repaying debts is a great way to build a reserve should an unexpected expense crop up, plus the sense of achievement of building up a nest egg. Savings with credit union will soon grow into a tidy sum!
Engage Account is our Visa Debit card account, great if you don’t want to increase your credit card debt. Plus it offers great cashback rewards and discounts at Asda, Argos, M&S, Debenhams and many more. Engage Visa card is accepted wherever you see the Visa logo (see terms and conditions)