Cookie policy
Follow this topicFollow this topic Knowledge » Debt

Destroy Your Debts In Five Steps!

Serena Cowdy
by Lovemoney Staff Serena Cowdy on 30 January 2009  |  Comments 45 comments

Put this five-step money diet into action and knock your finances into shape!

I started 2009 feeling a.) fat and b.) skint - a pretty depressing combination. I decided to take the bull by the horns and and tackle both at once. and it seems I wasn't the only one.

According to recent research from AA Personal Loans, over a third of us are cutting back on the calories this January, whilst 53% of us have decided to slim down on spending.

At least you can kill two birds with one stone when it comes to planning your health and money makeovers. Lots of diet and `getting in shape' strategies can also be applied to your finances.

So, if your bank balance is looking a bit sorry for itself, fight your debts the way you'd fight those extra lbs. Here's a five-step action plan to get you started:

1. Detox!

First of all, lighten your debt load by lowering the interest rates you're charged and cutting unnecessary payments wherever possible. Your to-do list should include:

  • Ditching Payment Protection Insurance (PPI) - or at the very least finding the best value cover on offer. This article, by my colleague Cliff D'Arcy, explains why most PPI is a total rip-off.
  • Cutting your credit card interest payments. If your credit record allows, switch to a credit card which offers 0% on balance transfers. The Virgin Money card is currently the market leader, offering 0% for 16 months.
  • Losing the high interest loans. If you are accepted for the Virgin card, you can also use it to make a 0% interest money transfer into your bank account. This could help you pay off debts charging a high rate of interest, like an unauthorised overdraft or a personal loan.

2. Slim down your spending

Cut back on spending just like you'd cut back on calories. How many of us eat when we're not really hungry? (I know I do).

So - when you're about to flash the cash, always ask yourself: Do I really need this? Can I get it/a similar thing cheaper elsewhere?

12 Ways We Can All Fight The Recession has lots of tips on how to cut your everyday living costs.

And for a host of moneysaving deals on homeware, fashion, books, films, eating out and travel, have a look at this article by my colleague Rachel Robson.

3. Don't crash diet!

Crash dieting just isn't a good idea. You eat nothing but lettuce for a week, achieve your `target weight', then feel so relieved that you eat 14 doughnuts and put all the weight back on again.

The same applies to your finances. The key to beating your debts is to devise a sustainable, long-term strategy that works for you. Here are some pointers:

  • Regular weigh-ins: Keep a spending diary, and note down every penny you shell out. This will help keep you motivated, and will also pinpoint any money `leaks'. And be honest with yourself. The scales don't lie and sadly, nor does your credit card bill!
  • Reward yourself: If you never treat yourself, the chances are you'll end up spending big when you do give in to temptation. So, find occasional and affordable ways to reward yourself as your debt shrinks. It could be something as simple as a day out or a nice meal from M&S.

4. Build financial muscle

Just as exercise burns calories, upping your income will help you climb out of the debt mire that bit quicker.

You don't have to make a complete career change (and, let's face it, now might not be the best time to try that!). There are plenty of ways you can earn a bit on the side while still keeping your existing job.

If you're in need of inspiration, have a look at Ten Easy Ways To Make Money. Or perhaps you'd prefer to Sell Your Youth To Survive The Recession?

5. Get help

Like a good slimming club, the Dealing with Debt discussion board is somewhere you can get non-judgmental help, advice and support.

It will also show you that you're not alone - in fact, there are millions of people in exactly the same boat!

More: Five Ways To Cut The Cost Of Debt | A New Way To Repair Your Credit Rating

Enjoyed this? Show it some love

Twitter
General

Comments (45)

  • deloco121
    Love rating 0
    deloco121 said

    Thank goodness. Another article with a link to Virgin credit cards and their all singing all dancing 0% balance transfer.

    I was starting to get withdrawl symptoms - I haven't seen a link for nearly 2 days now. Normal service resumed now though.

    If you do have to promote MBNA, who actually issue the Virgin card, then at least warn people that they better keep their card payments whiter than white. If you are late, even by 1 day, you will be charged a late payment fee and that brilliant 0% rate disappears and reverts to an APR higher than many loan sharks (which is what MBNA are in mine and many others opinions).

    I have a Virgin card and after getting stung by the 1 day late scenario, will never use them again.

    TMF obviously feels obliged to give MBNA their daily advert. It's getting boring now though.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • Rajeev89
    Love rating 0
    Rajeev89 said

    hi

    I am not supporter to any card but its applicable to any card, if you miss the minimum payment you are defaulter so why to blame other for your own mistakes.

    in today world everyone looking for freebs

    i think we should use the card with care and sense

    thanks

    Report on 01 February 2009  |  Love thisLove  0 loves
  • tishtash
    Love rating 0
    tishtash said

    Just about to say the same thing Rageev89.

    I have a virgin mbna card and i set a direct debit to cover the tiny mmr they take and pay extra at every oppourtunity.

    Managed well, credit limit allowing, it can be a very useful way to move your debts to a 0% interest rate and use the rest of your money to get rid of it.

    If you pay late what do you expect? They are a credit card company at the end of the day and they are there to make money. Its our job as Fools to play the game to suit our needs.

    Regards.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • Tagbartok
    Love rating 0
    Tagbartok said

    Hello.

    I took your advice and applied for the Virgin card as my current 0% deal with Alliance & Leicester was coming to its end. I applied online, entered details of 3 balance transfers including A&L and was accepted. When the documents arrived in the post I found that the large A&L transfer was not included as it's owned by MBNA. I should have known that but it would have helped considerably if the transfer could have been rejected at the time of application. I had to do some quick manoeuvring to avoid A&Ls hefty standard interest rates. I have now got the Tesco card too which offers 0% for 14 months. I set up a direct debit with Virgin after activating my card. This was actually recommended by the person I spoke to on the phone to avoid the issue caused by late or missed payments.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • deloco121
    Love rating 0
    deloco121 said

    Rajeev and tishtash

    I am not trying to blame anyone for my mistakes or am I looking for 'freebs' so please get your facts right. Y

    I am just trying to warn others about what to expect IF this happens to them.

    There have been multiple discussions over Virgin/MBNA and opinion is certaily divided about how they run their business.

    I would just like TMF to warn others about the pitfalls in their daily Virgin adverts.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • dontbeconned
    Love rating 0
    dontbeconned said

    Be very careful with those jokers at MBNA. I have just received a letter from them stating that from April 1st (appropriately!) 2009 the handling fee for money transfers will be 4%.

    Presumably this will also mean balance transfers. Bring back the good old days when there was no handling fees whatsoever. At this rate it will be 10% before too long!

    I believe it was Barclays Bank that started the balance transfer fee trend, hope they sink without trace as soon as possible!

    Report on 01 February 2009  |  Love thisLove  0 loves
  • petitemisschief
    Love rating 22
    petitemisschief said

    I know a lot of people will cringe at the thought and shout me down but if you have lots of diiferent bits of debts consider a consolidation loan. Not the cheapest way but if it was credit cards that got you in themess in the first place taking out a superdooper one isn't going to cure the problem. Take out the cheapest loan you can source, don't accpet PPI. Cut all your credit/store cards up except one. Give it to your mother or someone else you can trust or keep it somewhere very inaccessible (i put mine it the loft) and only use it for emergencies such as essential car repairs, boiler breaks down etc or forlarge purchase where you already have the available cash but want to make use of the insurance facility.

    Because you have consolidated the debts your payments will be less so save the difference to get some rainy day money behind you. Pay the loan by direct debit then there's no worrying about late payments and fees, and not using a credit card will teach you much better financial discipline. It worked for me when I found myself alone with 2 young kids and a tasty selection of debts from a broken marriage. It took me 3 years to get straight and I've never run up a bill on a store or credit card since.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • madmummy
    Love rating 0
    madmummy said

    We have a Virgin card.

    We were trying to clear 2 credit cards with rates of between 19%-25%. We were only paying a few pounds over the mmr's so were not getting very far.

    TMF was always writing about how much of a great deal Virgin gave their customers so we applied for their 0% card to transfer the balance on the 2 old cards.

    I had an online account which I used to make payments and for the first 2-3 months it was great. I would log on to pay the bill on a thursday before the due date every month. This was always on the sunday and as the payment would show on the friday and all would be fine.

    The next month we used the card to buy my 2 children new car seats. This pushed up the balance and it was about £9 under its limit. When I recieved the bill I logged on as always on the thursday before the payment due date and paid the mmr. This time though the payment did not show as paid untill monday. On the Sunday Virgin quickly slammed on a £12 late payment fee which pushed us over the limit so another £12 fee was added. On top of this they also stopped the 0% deal and so by the time the next bill came and we were made aware of what had happened the balance was nearly £100 over the limit, a mmr of about £170 was due.

    We rang Virgin and they said that because of the late payment the offer had stopped and we would not be getting it back. We explained that we could not see how this could have happened as we paid the bill the same as always but they did not care. They said that the computer did everything automatic and that it is up to us to make sure that payments are made on time. We continued to argue that we could not see how the payment was late if it had always been ok before but we hit a wall. This was the first time we had a deal like this, we were not aware that this would happen. We thought that if someone fell behind that Virgin would add fees and some sort of interest on anything owed over the limit but not take the 0% rate away all together. This was a blow to us, we did make a good size payment but we could not afford the full mmr. The next bill came and there were more charges and high interest charges. This continued for several months. We have managed to get it under control now but are making mmr of £65 and only about £11 of this comes off the £2,400 balance. We had a letter off them a few weeks ago and our interest rate is going up to £34.9% on both the balance on the transfers and purchases.

    We are in a position now that it will take us forever to pay it off. Maybe when our one year old is older I can return to work and we will be able to afford more than the mmr and we will get it cleared before our mortgage ends!!! Untill then we will continue to pay into the bottomless pit.

    I advise anyone who is considering one of these deals to set up a direct debit. If you cant do that then steer clear of MBNA.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • deloco121
    Love rating 0
    deloco121 said

    madmummy

    I would advise trying to get away from their 34.9% APR. That really is out of order, but unfortunately it's what a lot of people come to expect from MBNA.

    They sometimes move the 'due date' for the monthly payment, but they only ever move it forward, never back. This means that if you have a direct debit set up with your bank for a certain date and Virgin/MBNA change the payment date without you noticing on your statement then this can lead to the late payment scenario and loss of 0% deals and £12 charges. Then moving away from Virgin to another card is really hard because your credit record shows you as a 'defaulter'.

    I wouldn't touch MBNA with a bargepole.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • jansname
    Love rating 0
    jansname said

    Petitemisschief , I so agree with you, but only to a point. A loan does not take you away from the point in the first place .. YOU BORROWED MONEY YOU DID NOT HAVE - TO BUY THINGS YOU COULD NOT AFFORD TO PAY IN CASH .

    Only one thing for it . Plough all your cash into the cards, paying off the higher interest card first. Dont use them again ever . Keep one card like you suggest in the loft if thats what will- power you have . No bigger loan so you have a few pennies to play with each month for a rainy day. The most important message is to get the cards paid off and feel the pain .

    The you dont do it again !!!! ( well thats my latest plan anyway - i tried your method and ended up with a consolidated loan and 6 credit cards)

    Report on 01 February 2009  |  Love thisLove  0 loves
  • 2381nickp
    Love rating 0
    2381nickp said

    Somebody has to pay for the 0% balance transfer. MBNA don't offer it out of kindness.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • jansname
    Love rating 0
    jansname said

    Oh and 2 of them are with MBNA !!! Dreadful company worse than Sharks..... my fault for believing the man I married and putting them in my name...

    Report on 01 February 2009  |  Love thisLove  0 loves
  • Ferret1958
    Love rating 0
    Ferret1958 said

    Delodo121 said:

    "They sometimes move the 'due date' for the monthly payment, but they only ever move it forward, never back. This means that if you have a direct debit set up with your bank for a certain date and Virgin/MBNA change the payment date without you noticing on your statement then this can lead to the late payment scenario and loss of 0% deals and £12 charges."

    You would be covered by the DD guarantee. MBNA must inform you at least 10 working days in advance of a payment being taken if the payment amount, or the payment date changes. If they do not then get straight on the phone to your bank and raise an indemnity claim. This looks bad for MBNA, the bank will give you your money back immediately and it should make the bank charges payable by MBNA.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • davidtheguitar
    Love rating 0
    davidtheguitar said

    I have never had to worry about late payments or charges for years by simply arranging a direct debit to cover the minimum each month. You then pay additional amounts as you wish and if you forget one month its no problem.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • TheBankManager
    Love rating 0
    TheBankManager said

    'deloco121' - You say "This means that if you have a direct debit set up with your Bank for a certain date and Virgin/MBNA change the payment date without you noticing on your statement then this can lead to the late payment scenario and loss of 0% deals and £12 charges".

    May I enquire whether you are aware that under Direct Debiting, if you have instructed the beneficiary to CLAIM the MMR or full payment and they fail to do so by the due date (whether the same each month or moved 2-3 days either way), it is NOT the account holders fault?

    Under the circumstances, you can approach the Financial Ombudsman and having proven that with the DD set up (and past DD claims history from your Bank and card statements), the account holder has placed the onus on the claimant, i.e. MBNA/Virgin, they cannot ramp up the fees and charges as they instruct their own Bank to process the payment.

    I pay all my bills on-line and 5 working days before the statement due date and I have become - over the past 10 years - able to time such payments, so as not to incur any fees.

    Were all other Fools able to be just as disciplined, then the tone of some of these other comments may not be so much as seeking to pass the blame, but accept that they need to be more astute?

    OK Fools, it's now a 'free for all' for those who seek to knock me - especially given my sign-on! Away you go........

    Report on 01 February 2009  |  Love thisLove  0 loves
  • davidtheguitar
    Love rating 0
    davidtheguitar said

    Mr Ferret. I have never heard of the date changing so if that is the case why would they do that?

    D t G

    Report on 01 February 2009  |  Love thisLove  0 loves
  • happygirl58
    Love rating 0
    happygirl58 said

    Any advice for those would NOT be accepted by Virgin/MBNA? Not everyone has a credit record good enough to pass the initial test, so some alternatives would be useful.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • madmummy
    Love rating 0
    madmummy said

    We tried getting a loan to consolidate with our bank, but as we all know they are not lending to many people now, you have to have a perfect credit history.

    Eventhough we have been keeping up to date on everything we have for months, the problems we had with virgin in the summer has knocked our credit score and so we cant get a loan.

    We could get a secured loan or one with a really high interest rate but that is with a not so good lender which in my view is out of the frying pan into the fire. We had an offer in the mail a few days back for £3,500 over 3 years. I think it was with Bright House, if I remember right the repayments were over £150 a month and the interest was something like 51.9%!! Needless to say this was ripped up and thrown in the bin. It frightens me to think how many others have had these offers and accepted them. Whats worse is that the only people we have applied with is the bank so they must have passed our details on to someone linked to this shark type company. These loans should not be allowed.

    If we had been offered a loan with the bank though we would have taken it. I know some people will say thats not the best thing to do but we have been bitten by MBNA and I want to get away from them asap. I know that we would not spend on the card again. We have learnt a hard lesson and I am a very once bitten twice shy kinda gal. I know that some people would spend on the cards again though and thats where things will get very bad.

    One thing I am going to do to free up some extra money is to pay off a home shopping debt I have using the council tax free months. I always use my £125 child allowance to pay the council tax, but as we pay it in 10 monthly instalments we have 2 months off now before the new bill comes in april. My home shoppping balance is about £250 but its over £47 a month. I'm using the 2 child benefit payments that I now have spare to clear that debt, freeing up £47 a month. Its not a massive amount but I can use that to pay a little extra off the high interest card.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • pjpunter7
    Love rating 0
    pjpunter7 said

    I never had cause to use credit cards until I got injured at work and could no longer earn money.

    It was an eye-opener, and, perhaps, because of my inexperience, I fell into many of the pitfalls mentioned above.

    Basically, never forget that money-lenders and debt-collectors do everything they can to make money. "Tricking" the naive is part and parcel, and as has been pointed out above, nobody gives you anything for free; somebody pays for the so-called "zero percent".

    However, we are where we are, so I'd say that the scheme illustrated by "Bank Manager" should be made into an integral part of ALL future credit card agreements.

    These things are best avoided if possible, but if needs must, then make sure you're set up on the right footing: put the onus of collection on them.

    It sounds like a very good arrangement to me.

    Btw, even though I had no income for ten years, various companies offered me card after card. I took most of them, thinking that they may be useful one day.

    When things were really bad, I had to use some of them, so, from personal experience I can confirm that most of them are bad news.

    Certainly, any of the American ones are VERY bad, ie MBNA and Capital. They can be terrible, in my experience.

    Others that I fell out with include Halifax and Abbey.

    Luckily, I'm in a position nowadays not to need them. I paid 'em all off bar, ironically, this MBNA Virgin thing, which I took out ( second time round) a few months ago.

    Silly really, I suppose, but, in these uncertain times, I figured that I'd rather pay 10% of the interest free sum monthly. At least I see the total debt diminish regularly.

    Cash is King, imo!

    Report on 01 February 2009  |  Love thisLove  0 loves
  • deloco121
    Love rating 0
    deloco121 said

    2381nickp

    "Somebody has to pay for the 0% balance transfer. MBNA don't offer it out of kindness."

    I thought that was what the 3% Balance transfer fee was for?

    TheBankManager

    You may indeed enquire as to wheter I was aware of the DD guarantee and I must admit that No, I was not aware that I had to be contacted 10 days beforehand, if they were going to change the due date.

    I am now.

    But in all honesty, it's in the past and Virgin/MBNA have lost another customer. I really have not the time or inclination to chase the late payment fee. I swapped my Virgin balance as soon as they cancelled my 0% deal.

    As for the 'blame' comments I cant tell if they are supposed to be aimed at me or not. I cant really see anyone blaming anybody else in the posts so far. I know what happened with my account and accept that in the eyes of MBNA, I was a defaulter. Who cares?

    I'm just pointing out that MBNA are a pile of s#*t in my eyes.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • mikefour
    Love rating 0
    mikefour said

    deloco121 - You should pursue these wretched blood-suckers just on principle alone. If you don't they get away with it. They have charged you illegally and they should be made to make a refund. As for other comments on changeing the 'due'date' - they do it all the time. So much for for the FSA and other so-called consumer protectors. Good luck.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • hungary
    Love rating 0
    hungary said

    Fighting MBNA at mo. They are telling nasty lies and using India-based debt collection agency. Stay clear!!!

    Report on 01 February 2009  |  Love thisLove  0 loves
  • lokifan
    Love rating 0
    lokifan said

    Having had a Virgin card and since 0% ended found that the interest rates were just beyond a joke, since I have several other cards one also a 0% just ended I decide to look around again.

    Just got a great "lifetime" balance transfer rate at 8.22% (better than best loan rate with either of my banks) with capital one which actually lasts until August 2012 which means if I pay the required 3% each month I will be in the clear by then.

    I even have a further £2000 to use if I want to tranfer another balance (which I might do as I have a car on HP at around 23%apr with around £1900 (at £116 mth) owing until final payment,so tranferring this will get me an partial interest rebate thus overall reducing the debt and in total I will be paying less each month on this card than the car and other credit cards with smaller interest rate to boot. Now I have just got to behave myself and not be tempted to spend on the cleared cards (where are those scissors)

    Report on 01 February 2009  |  Love thisLove  0 loves
  • deloco121
    Love rating 0
    deloco121 said

    Mikefour,

    You are correct. Of course I should. Unfortunately I doubt very much if I still have statements and other paperwork to back up the facts. It did happen some time back but I know what they did. I was not aware that I had to ne notified before they changed the 'due date'.

    I also know they do it to others, although I don't know if MBNA are alone in this practice.

    It just annoys me to see TMF constantly 'plugging' the Virgin card in damn near every article. It may well have the longest 0% deal on the market but as I mentioned in the very first post, unless you stay whiter than white on the payment side, I don't believe it's worth leaving a reputable card issuer to go with them.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • nitnot
    Love rating 5
    nitnot said

    If you can't pay off your credit card (on time) every month, then cut it up and use a debit card instead! Then perhaps you'll not be tempted to spend money you haven't got! That's what got you into debt in the first place, isn't it? As I have said on many fool sites, the easiest way to make money is buying and selling things. I made a hefty pile by buying things such as plant and machinery and even whole factories, which businesses couldn't aford and hiring them to lesser entrepreneurs!

    Another bit of simple money making advice which I have proved really does work: Look around at what other successful people are doing and tell yourself: 'I could do that - and make a far better job of it' Just keep your eyes open for opportunities. Eg. My uncle left the Army after spending his war driving trucks. He could hardly miss the bomb damaged buildings as he made his way home across London and said to himself 'someone is going to make some real money clearing up this almighty mess - and that someone is me! So he called up a couple of mates and they bought an ex-army 10-tonner, followed by another and another. He soon had a 20 strong fleet and 50 employees because being an ex-sergeant he knew about people as well as trucks. He died aged 86 with as many £millions sitting in the bank - and all because he looked around and said 'I could do that!'

    Report on 01 February 2009  |  Love thisLove  0 loves
  • deloco121
    Love rating 0
    deloco121 said

    Wow nitnot, what fantastic advice.

    Now all we need is an unspecified amount of spare cash lying about to start buying and selling things or a brass neck to go to the bank and ask for money to start my own business. Given the present economic climate, what do you think Mr Bank Manager's answer will be?

    I think it would be 2 words, one beginning in F and the other ending in F!

    I would agree with your opening sentence though.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • nitnot
    Love rating 5
    nitnot said

    deloco121 - forget the Banks. They are far too busy pocketing the bailout £billions we taxpayer handed them! Why not get a couple of mates (or family) together and buy a white van - either second hand or new on credit but haggle for the best deal! Then offer a 24/7 man-with-van courier/delivery service - and canvass the national carriers as many use local white van men. Use your profits to settle all debts asap and then invest in a bigger and better van - or another, but make sure that the business is there first!

    Chuck out the carpet slippers and flog the 'telly -you don't need either and forget about holidays and evenings down the pub! Keep your eyes open for opportunities to say 'I could do that!' And set your sights firmly on that first £100K - and the first £million will be a cinch!

    Report on 01 February 2009  |  Love thisLove  0 loves
  • SiGl26
    Love rating 26
    SiGl26 said

    If you go for a 0% deal, ALWAYS set up a variable direct debit for the MMR. That way you cannot be late.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • LibranLady
    Love rating 0
    LibranLady said

    Rajeev etc .... The payment date is not always convenient. For instance, I get paid on the 15th of each month, but my payment needs to be in by the 17th! Allowing for five days for the payment to get there... how is this going to happen then?? So think of other peoples situation, not just your own holier-than-thou attitudes!

    Report on 01 February 2009  |  Love thisLove  0 loves
  • Flartybart
    Love rating 0
    Flartybart said

    This fantastic Virgin Credit Card the Fool try to push everytime, I have one, now charging 34.9% interest. The 0% balance transfer is just a trap to sucker you in. I can only imagine the Fool keeps advertising them because they get a chunk of the ridiculous 34.9% interest rate. AVOID MBNA at all costs, no matter how good it looks, just read all the negative comments about them to be convinced.

    Report on 01 February 2009  |  Love thisLove  0 loves
  • tintin13
    Love rating 0
    tintin13 said

    To me credit cards are necessary evil but you have to play them well.

    In particular, MBNA thinks they are smart but I understand their game well and play it well.

    The first thing is to set up a DD. Even if they change the date, it wouldn't affect you.

    We have a squeaky clean record as we have never been late on any payment but still the folks at MBNA thinks that they should charge us 34.9% interest once our 0% offer is up in June. I will explain their thinking.

    We have £18,900 credit limit with them which we paid off without incurring interest last year. As soon as we paid it off, they called to offer us another balance transfer of 0% for 12months. I took the offer and made sure my DD was still active.

    You can take a wild quess on how much MBNA has been charging as minimum payment for the past six months?

    They've been collecting only £6 as minimum every month. I don't know what calculations they are using. That is £6 on £18,400 debt. And quess what, I have not bothered to pay any extra too. So, they think they have gotten us and sent a letter to say our interest will increase once the offer is up.

    Anyway, I have started paying back £3,600 this January and will pay same amount till June. I can see on our account that there is an offer already. I wonder when they would learn that we won't be caught with interest of 34.9%. If after we clear off the debt by June and they make an offer again, I will take it and play them again.

    Another thing was that we only paid £50 for our balance transfer of £18,350. It was part of our offer.

    In conclusion, MBNA are sloppy crooks in my own book.

    Report on 02 February 2009  |  Love thisLove  0 loves
  • Brim81
    Love rating 0
    Brim81 said

    As a regular reader of the Fool I have already balance transfered my credit card debt, switched my utilities, slashed my outgoings, kept a spending diary, got a lodger, sold stuff on Ebay, looked on dealing with debt and LBYM boards for advise and am in the process of snowballing my debts. Another repetitive article telling me to do the same things will not 'destroy my debts' it will merely reduce them slowly over a periof of time! Please please please can we have some new material and ideas!

    footnote: yes I have a Virgin CC, yes they did cancel my 0% after I missed my first payment but then reinstated it when I phoned paid and set up direct debit so i can't complain about them.

    Report on 02 February 2009  |  Love thisLove  0 loves
  • nitnot
    Love rating 5
    nitnot said

    Brim81 asks for 'new material and ideas'. Well, I have tried to provide exactly that on various Fool boards but with very little response! The bottom line is obvious: you either need to earn more - or spend less. Do both and you'll get there faster!

    In my 6.14 posting yesterday I suggested an easy way to earn a bit more, adding my stock advice for budding entrepreneurs: keep your eyes open for what other's are doing and tell yourself "I could do that - and make a better job of it" The examples I have given over the past few years are all based on actual events including how I went about it from my early 'teens until I retired aged 48 having made far more than I could possibly need to see me into old age and beyond! Now for how to spend less: My nephew had around £50K credit card debts. Of course I could easily have loaned him the cash to pay it off but I decided to give him some free advice instead to discourage him from repeating his earlier mistakes. He sold everything he didn't actually need via a garage sale and on Ebay. Sold his flat, paid of his mortgage and moved in with a friend. Cut up all his credit cards and drew up a monthly budget. He worked evenings and weekends cutting lawns and trimming hedges. Within six months he was well into the black so with a mate bought a white van. He now operates a 24/7 EU wide courier and delivery service, has 10 employees and 5 vans. and earns over double his previous salary! He still has no credit cards but does have £100K in the bank - plus the equity in his business. And he doesn't owe anybody anything!

    Report on 02 February 2009  |  Love thisLove  0 loves
  • FooQueen
    Love rating 0
    FooQueen said

    I have had loads of credit cards over the years, and it just takes a little bit of organisation to run them for your own benefit. If you can't be bothered to sort your own finances out, who do you think is going to do it for you.

    Most will change the payment date if you ask to a more convenient one, but surely if you know you need £x to meet your DD's, what does it matter when they leave your account? Just takes a bit of thought...

    Report on 02 February 2009  |  Love thisLove  0 loves
  • oldwoodie42
    Love rating 0
    oldwoodie42 said

    tintin13 is repaying £3,600 per month to MBNA. Why? Wouldn't the better plan be to follow the Fool's advice; pay this money into a safe savings account for six months and then repay the whole amount to MBNA in one go? This way you get to keep the small amount of interest instead of giving it to MBNA for nothing.

    Report on 02 February 2009  |  Love thisLove  0 loves
  • hakerite
    Love rating 0
    hakerite said

    WOW - Poor old MBNA.

    MBNA were always my first choice for balance transfers, partly because I could borrow the most amount from them. Even when transfer fees were introduced I could negotiate around them - it just depends. Perhaps not today though.

    Not too long ago I had 23 credit card loans, no fees and with the funds, I put them all into a high interest bank account. I NEVER USED THEM. After early teething issues I managed a healthy return on my £137K of free borrowings over a couple of years.

    What concerns me today are the fees. THERE IS NO SUCH THING AS A 0% BALANCE TRANSFER. If a transfer incurs a fee of 3% for twelve months then the cost is 3% per annum. If that period is, for say 6 months, then the cost is 6% per annum and, as has been rightly pointed out, you need to clear that debt before the end of the period - I always allowed at least two weeks.

    My advice as a card player would be, always clear the debt at the end of the month and if you do have a loan, you must set up a direct debit to cover this - it's so easy to overlook payments and as here discussed, charges can go through the roof if you delay.

    It's what credit card companies rely on so pay up or shut up!!

    Report on 02 February 2009  |  Love thisLove  0 loves
  • rowlystravel
    Love rating 27
    rowlystravel said

    the Virgin credit card online payment system is clearly flawed too. I paid with plenty of time for clearing but unless they apply the funds to your account they pull the rug on you!!!

    BTW they take the money from your bank straight away when you pay them directly on line..

    Imagine walking into Tesco, getting your shopping,and when you get to teh checkout the cashier says ''OK, we've taken your money, now if you want to leave the trolley full of shopping here you can pick it up in 3 days''

    I dont think so... I moved to capital one as virgin did this to me 4 times!!!! i gave them 4 working days at one point to apply the funds!!!

    Report on 02 February 2009  |  Love thisLove  0 loves
  • Ketawa
    Love rating 0
    Ketawa said

    i have gone through this process with experian and after finding out that american express has black listed me for an issue they created. This was resolved after 5 years and 10 months. I asked them to remove their black listing and although they have assured me of this, i still do not have a good credit rating, last checked 3 months ago. i was told by Experian that each time a company took up credit rating reference on me, my rating drops. I really do not understand how this system works and how damaging can be.

    Report on 02 February 2009  |  Love thisLove  0 loves
  • SiGl26
    Love rating 26
    SiGl26 said

    Tintin13 - Hope they offer me the extension... did they want the 3% BT fee?

    BTW - one only pays the 34.9% rate if one breaks the T&Cs one has signed up to; Fool makes it clear there are strings attached so should not be blamed if you're too disorganised to make your MMRs and have funds available to pay off at the end.

    Sorry if this sounds 'holier than thou'; I accept I'm lucky in that I can always afford to pay off the balance on my 'spending' cards in full every month, but I screwed up last month with a card I have generally stopped using and had not restored the DD on; £12 fee, horrendous interest, my mistake, no complaint

    Report on 02 February 2009  |  Love thisLove  0 loves
  • tintin13
    Love rating 0
    tintin13 said

    oldwoodie42

    Thanks for the advice. But I am not that disciplined with savings. When I need money I easily dip my hands into savings. It's better for me to start settling the money monthly. If I had the whole £18,400 then I would wait till June to pay everything off. But we don't have that amount and have to start paying it off in bits.

    On the other hand, if they do offer me another 0% balance transfer at the end of paying this off, I plan to just leave it in a savings account and then, I will pay everything off at the end of the offer.

    Report on 02 February 2009  |  Love thisLove  0 loves
  • SiGl26
    Love rating 26
    SiGl26 said

    Hakerite - it's worse than you say, because the 3% is on the full balance, that then reduces each month with your MMR. For this reason MBNA's tiny MMRs are to one's advantage. If the MMR is a more typical 2% per month, the 3% fee is 3.31% APR for 12 months at 0% (or 6.25% APR if it's only 6 months)

    Report on 02 February 2009  |  Love thisLove  0 loves
  • hakerite
    Love rating 0
    hakerite said

    SiGl26 - Yes it is but MBNA's MMR was £5.00 per month. How bad is that on £35K. Others were generally up to 2% repayment per month but no charges.

    Did you know (of course you did) there were only 5 different card companies - all the others were variations on a theme and often the right hand didn't know what the left hand was doing. I'd apply for a transfer online and was refused because I'd 'maxed out' in the group. However give them a call and "No problem Mr C - we can do it over the phone".

    Wonderful stuff - not worth it now though - where can you get 6.24% guaranteed on your deposits with no limit? If you know, please advise ASAP

    JC

    Report on 03 February 2009  |  Love thisLove  0 loves
  • lisar08
    Love rating 0
    lisar08 said

    Just been reading this article. I would like to know what the next step would be if I cannot get a Virgin Credit card (or any other card) Even Vanquis will not accept me. The people who are in debt are the people who cannot get these 0% interest cards so how about helping the poor guy instead of people who have pounds to squander. There is little help for people who are unable to go through Public funding - such as Debt helplines, we still have to endure the bombarding of Debt collectors who even though they should accept a token offer (£2 or £3 per week) by law - will not.

    Start helping people who will boost economic spending rather than those who hoard and then complain that they only have £200 per week to live on. Try shopping for a family of 3 including gas, electric, water rates, tv licence let alone food for less than £50 per week.

    Comments would be appreciated!!!

    Report on 05 February 2009  |  Love thisLove  0 loves
  • JadeWilliams
    Love rating 0
    JadeWilliams said

    At this point, I'm still happy with my Virgin 0% card. I THOUGHT I set up a direct payment from bank account, but I actually only set up one month, not 12 months. The one payment went out but then I missed the next month and didn't realize it until another month later. I called them up frantic and made a payment over the phone and inquired about what would happen to my 0% rate and the person was happy to reinstate it for me. I didn't complain about the late charge...I was late! I was just happy to get the 0% back. I'll have the balance cleared within 12 months!

    Report on 11 February 2009  |  Love thisLove  0 loves
  • showground
    Love rating 0
    showground said

    I need to get this off my chrst. MBNA !!#####£$%^&&*()()

    I becsme a debtor of this firm and after the treatment I received over the phone from a specialist team they employ for the purpose I wouldn't bank with them or repay anything I owe them!

    Phoning 16 times a day. Phoning back 6 times when I kept putting the phone down on them. Lying to me and calling me a liar. Threatening to report me to my employer. Bailiffs to call etc,etc,etc, ask me to and I could write a book. Strange how little Richard Branson cares of his name bring associated through Virgin, with these clowns.

    Report on 13 February 2009  |  Love thisLove  0 loves

Post a comment

Sign in or register to post a reply.

Related content

Our top deals

Credit card
company 		Balance transfers rate and period Representative
APR 		Apply
now

Barclaycard 27Mth Platinum Visa

0% for 27 months (3.5% fee) Representative 18.9% APR (variable) Apply
Representative example: assumed borrowing of £1,200, representative 18.9% APR (variable). Purchase rate 18.9% PA (variable). BT fee is reduced from 3.9% to 3.5% (T&Cs apply).

Barclaycard 25Mth Platinum Visa

0% for 25 months (2.4% fee) Representative 18.9% APR (variable) Apply
Representative example: assumed borrowing of £1,200, representative 18.9% APR (variable). Purchase rate 18.9% PA (variable). BT fee is reduced from 3.5% to 2.4% (T&Cs apply)

Halifax BT 25 Month MasterCard

0% for 25 months (2.5% fee) Representative 18.9% APR (variable) Apply
Representative example: assumed borrowing of £1,200, representative 18.9% APR (variable). Purchase rate 19.0% PA (variable).
W3C  Thank you for using CGWEBLIV3