Are banks allowed..

[Ice.Maiden]

to refuse the transfer of credit card payments onto a loan account? A lady who visits me is sick with worry. She pays �160 a month on a credit card balance of about �8000 - of which most of it pays the interest. As she can't afford to pay any more, the debt'll take years and years to pay off, whereas I suggested that by paying the same amnount over 5 or more years on a loan account'd at least provide a light at the end of the tunnel. She asked her bank about this, and her application was refused, even though they can see that she'd able to carry on paying this amount, & she's never fallen behind. I don't know how to help her further.

[warpig3]

Morning ice.maiden. I think the problem may have been telling the bank the real reason for the loan.

I was in this situation many years ago and can understand your friends worry. I did not approach my bank I went to reputable high street building society and borrowed 5k for 'house renovations'. Once I received the money I paid of the credit card in full and allowed the loan to run its term (5 years).

If she decides to do this make sure she acts with caution. Firstly, she should not borrow more than she needs, no point is substituting one debt for a larger one even if the terms are better, it is still a larger debt.

Avoid Ocean Finance type companies and those loans that are secured on property if at all possible.

Do proper research to find the best deal ie fixed rate interest for the term.

Once successful she MUST destroy her credit card, this is paramount. It is so easy to pay it off with another loan and then use the card again and hey presto the balance creeps up and up and you are back to where you started.

I do hope she is successful in resolving this situation but with todays credit climate she may find lenders much more difficult and questioning than I did.

[warpig3]

Oops meant to add this website.

http://www.moneysavingexpert.com/

Hopefully she will find something useful on it. I am sure there will be an option for her to transfer her current balance onto another credit card that offers interest free payments for the first 6 months - 1 year. Again, if she does this she must destroy her first card and not use the second.

I dont know the full details but I understand that if the debt is over a certain amount and she is struggling she can ask the company to freeze the amount and renegotiate payments but I would presume that this course of action would affect her credit rating. Sorry to be a bit vague on that one but perhaps someone else can shed more light on it.

[newmummy]

hi ice.maiden

i work for a high street bank and my role there is to arrange loans.
basically the loan would have been declined due to either her credit rating or her income.
what all responsible lenders must due is lend within the customers free income affordabiltiy, this means that once all her bills are paid, mortgage/rent any other loans, gas elec, water etc, that what money she has left there is enough to cover a loan repayment and general bills like food and petrol etc.
if she is genuinly struggling and you are concerned my advise would be to contact citizen advise who will put her onto a honest debt management company who will more likely suggest an IVA.
IVA - individual voluntary arrangement where the debt can be paid off in 5 to 6 years

hope this helps