Looking to Consolidate Credit Card Debt?
A loan to pay off credit card debts. Loans from £5000 to £75,000.
If you’re struggling with credit card debt and think the chances of repaying it are slim, don’t worry – a consolidation loan might be just what you need. By using the money provided, you could shut down your credit cards and leave yourself making just 1 monthly payment.
You could benefit from:
- Quick approval - with all credit histories considered!
- Fewer creditors contacting you.
- Finances that are easier to manage.
- Fast loan pay-out straight to your bank account.
In this article, we'll cover:
- Is it a good idea to consolidate credit card debt?
- How does credit card consolidation work?
- Can I consolidate my credit card debt with a balance transfer card for bad credit?
- What is bad credit?
- Is it worth taking out a credit card for bad credit to pay off credit card debt?
- Eligibility for credit card debt consolidation
- Pros and cons of consolidating credit card debt
- Can I consolidate credit cards without hurting my credit rating?
- Why Choose Us?
- Credit Cards and Bad Credit FAQS
Is it a good idea to consolidate credit card debt?
If you find a loan that ultimately leaves you paying off less in the long run, then consolidating credit card debt should be a good idea. It’s important, therefore, to review the terms and conditions before committing and make sure:
- Your monthly payments are affordable.
- You will pay a lower interest rate on the loan than on your credit card debts.
- The repayment period is not excessively long.
If your debt consolidation loan ticks those boxes, this solution should be just what you need. For more information though, take a look at our guide ‘when is debt consolidation worth it?’.
Although debt consolidation loans come with the convenience of consolidating debts into one payment, in some cases you may pay off your debt over a longer period of time with a consolidation loan.
Also, in the rare event, you choose to consolidate lower interest debt with a consolidation that has a higher interest rate you could be paying back more in interest over the course of the loan term.
We’re actively trying to find you the best deal possible as we’re a broker, not a lender. It’s in our best interests, therefore, to locate a consolidation loan that gives you value for money.
APRs from 5.8% to 89.9%
We are a broker, not a lender.
Unsecured Loan Representative 69.9% APR
Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
Secured Representative 11.7% APR
If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.
How does credit card consolidation work?
Credit card consolidation is where you use a loan to pay off all your lenders. For example, if you have credit cards with Natwest, Halifax, and American Express, a consolidation loan would cover everything you owe to these firms.
You would use the money to close these accounts one-by-one until you’ve cleared your credit card debt.
Instead of juggling repayments to these three lenders, you only have to focus on one. This would be the company that provided your consolidation loan.
Chances are, you’ll now be making smaller monthly repayments, dealing with better levels of interest, and a shorter repayment period.
A debt consolidation loan would work best if you were able to obtain a large enough loan to pay off all of your debts with the loan.
Can I consolidate my credit card debt with a balance transfer card for bad credit?
Many people consider paying off their credit card debts using a bad credit balance transfer card.
A balance transfer card allows people to pay off multiple credit card debts by transferring the debt onto a new card with lower interest. This type of debt solution is primarily used for credit card debt consolidation.
A balance transfer may not be the most suitable debt solution for you if:
- You are unlikely to be approved for a lower interest rate than the ones on the cards you currently have.
- You have a variety of debts that need to be consolidated - not just credit card debt. (i.e. personal loans, payday loans, store cards).
- You owe more than the average credit card balance.
In this case, you may find a debt consolidation loan is your best option to improve your financial situation.Consolidate Your Debts
What is bad credit?
“Bad Credit” is a term used to describe a credit score that is below a desirable number.
Bad credit is typically a result of multiple factors:
- Missed or late payments to creditors.
- "Default Notices" on a credit file.
- A County Court Judgements (CCJ) is being issued on the credit file.
- Paying less than the contractual payment owed.
- Taking out too much credit at once.
- Having no history of managing credit.
People who have bad credit typically find it difficult to be accepted for new lines of credit. That being said, the Debt Consolidation Loan acceptance criteria of our panel of lenders. Here at Consolidation Express, our panel of lenders base loan acceptance on many factors
Is it worth taking out a credit card for bad credit to pay off credit card debt?
People often consider taking out another credit card for bad credit to repay their credit card debts. However, this is not always the best option for your finances.
Credit cards typically come with higher APRs than debt consolidation loans, especially for people who have a poor credit score. Hence, it is usually better for people’s financial future to take out a debt consolidation loan rather than another credit card.
Eligibility for credit card debt consolidation
- You must have multiple unsecured debts that you are struggling to pay.
- Consolidation loans typically have a repayment in excess of £75.
- You need to live in England, Wales, or Northern Ireland.
Pros and cons of consolidating credit card debt
Like many other financial solutions, there are pros and cons to consolidating credit card debt:
- Fewer payments to make each month – simplifying your finances.
- Borrowing at lower interest rates can save you money.
- You can repay your debts sooner.
- With only one lender to pay your finances are simpler to manage.
- A chance for you to improve your credit score.
- Like any other loan, a consolidation loan may initially harm your credit score as it will increase the amount of debt that shows on your credit file.
- As the money gets paid directly into your bank account, it is your responsibility to ensure you pay off your credit card debt.
- If you continue to spend after clearing your credit card balances, this would put you in a worse position.
Can I consolidate credit cards without hurting my credit rating?
Initially, taking out a consolidation loan will probably damage your credit score as you’re taking out another line of credit. However, as you close your accounts – shrinking your credit utilization ratio – and start making payments on time, you should improve your credit score.
Why Choose Us?
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Focus on only one monthly payment.
No problem. We consider all credit scores - even bad ones!
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Credit Cards and Bad Credit FAQS
This is the total ratio of how much you owe divided by your credit limit. For example, if your credit limit was £10,000 and you owed £5,000, this ratio would be 50%. As a general guideline, it’s typically recommended to keep this figure at around the 30% mark.
According to statistics from The Money Charity, the average person in the UK would take more than 26 years to pay off their credit card debt – assuming they made the minimum repayments. Furthermore, this type of debt stands at around £2,600 per average household.
With so many people struggling to pay off what they owe – it’s only natural to look for a solution. After all, who wants to spend over a quarter of a century paying off debts?
You can use a credit card for debt consolidation, but this solution can be risky. For example, many card providers will use an introductory offer of 0% interest. However, if your debts aren’t paid back in time, this solution could become extremely expensive. Ultimately, this might leave you in worse financial shape than before.
If you’re transferring multiple accounts to one credit card, providers will also typically charge you a fee for doing so. This amount varies but, again, can be costly.
If you pay off your debts within the introductory period, a credit card could be a cost-effective solution. However, if you miss the interest-free window, you may wish you had chosen a debt consolidation loan instead.