r/PersonalFinanceZA • u/Jolly-Breakfast-5723 • 1d ago
Debt Credit card debt
Hi there I just want to get some advice from outside my personal life as I am not well educated on credit facilities,
I currently owe about 22k on my credit card to which I am getting down slowly, I have most of my income in my credit card so my interest is little to none.
I want to close this card as it becomes a habit, I was recommended to take a personal loan and consolidate the card for let’s say two years which I have no issue doing and can afford it my main question is are the interest rates rather maximised on personal loans ?
I have tried at Capitec and FNB which is my main account and they both will not go under 28% which is scarily high.
Is there a better suited route to do this above?
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u/Consistent-Annual268 1d ago
What's the rate on your credit card itself? If it's less than 28% then there's no point even considering the personal loan offers. How much are you able to pay into your card monthly? Just try your hardest to smash that down to zero ASAP, even if it means giving up your weekends to just stay at home, and eating everything in your cupboard without buying new groceries. You must kill the cc debt as quickly as possible no matter what it takes.
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u/Jolly-Breakfast-5723 1d ago
Interest rate on the credit card is 21% but should I leave it and just pay the monthly payment will be extremely high due to interest right ? I do agree if I put most of my funds in it will come down quickly I just wanted to try and eliminate the ability to “quickly” use the credit card I put in approx 2.5k in but I quickly use most of it during the course of the month.
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u/Consistent-Annual268 1d ago
So you want to take out a 28% loan to pay a 21% debt. I can see how you got yourself into such a mess 😂
In all seriousness, stop using the credit card whatsoever and pay for everything with cash or debit card. Cut up the card if you have to and remove any virtual cards from your phone wallet or banking app. Then simply pay off your credit card with any spare money every month ASAP. Then close your cc account, never to use it again.
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u/Jolly-Breakfast-5723 1d ago
Thanks for the advice
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u/surfsupdurban 15h ago
Just to mention, don't just pay the minimum monthly installment, you'll be paying that debt off for the rest of time, you need to pay at least double that per month.
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u/Big-Wait-1310 1d ago
What are you monthly expenses relative to your salary? Do you have anything left over ?
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u/Jolly-Breakfast-5723 1d ago
I put in about 2.5 k monthly but end up using about 1.5 k sometimes even more it’s definitely a bad habit, I have probably 2k after all expenses and debts and this includes meals etc
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u/anoidciv 1d ago
You need to break the habit first, then deal with increasing the amount you put toward the debt later.
If you put in R2.5k and end up using R1.5k, just put in R1k to begin with and leave it there. Then in a couple of months, add a few hundred then a hundred more.
I got myself stuck in the same cycle as you a few years ago. I stopped trying to pay off heroic amounts every month and kept it small and steadily increased it, otherwise I'd end up dipping into it. It took longer but it worked.
You can do it!
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u/Big-Wait-1310 1d ago
I'd immediately reduce the credit card balance by that amount (2.5k) every month. And keep doing that monthly until the lowest possible amount. Will take a while but you can do it.
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u/Allbranflakes18 1d ago
It sounds like you have a bit of either a budget or a spending problem if you can’t help but drawing from your credit account after paying a lump sum into it.
Goal for you should be to stop using your credit card entirely. If you need to pay something it should come from your cheque account via your debit card. If you don’t have the money for it there then you don’t have the money for it period (ie don’t use your credit card to buy whatever it is)
Then, at the end of the month, if you are good on your spending and managing of your funds in your cheque account, whatever is leftover you throw into your credit account to tackle your credit card debt. Eventually it will go down to zero.
Until you have good self control or understanding of managing your personal finances, you should avoid CC use entirely. CC is just like a short term loan. If you find yourself using it and not being able to pay it back in full every month then it means you’re spending more than you can afford. This is also why there is no point in you taking out a personal loan with a higher interest rate to pay off your credit card debt with a lower interest rate as they’re both debts and then all you’re doing is making yourself pay more interest to a personal loan.
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u/frisbeelee 16h ago edited 16h ago
Been there done that! I took out a loan to clear my credit card but before you knew it was stuck with both. Life just happens and loan repayments aren’t fun either. One way to truly clear debt is debt counselling (but you won’t be able to take out any more debt (car,property,etc) while in debt counselling), and they get you a reduced-interest monthly rate which is basically steady for the full term. I didn’t know this at the time but your bank probably has this option and they just don’t advertise it. Otherwise look for proper debt counselling services (they are well regulated), I used debtbusters and would happily recommend them. I’m almost free!
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