Using credit card to pay off expensive loan?

whereschris

HI

My Girlfriend took out an expensive loan. I'm trying to ditch it and had originally though of getting a cheaper loan. However, I have been reccomended to get out a 0% deal on a credit card and pay it off that way.

Is this a good move?

latecomer

I'd say so. I dont know whether you can pay it off directly as a balance transfer but there are cards called super balance transfer cards which allow you to transfer funds to your current account (by putting debt onto the card) which you could then use to pay off the loan. Search this forum and you'll get lots of info.

One thing to bear in mind is that any deal on a card will probably be for a limited period only and to get the best deals, you'll need a good credit rating.

exel1966

Most finance companies will not accept a credit card to clear the loan.

You can apply for a credit card, MBNA, EGG, POST OFFICE where you are permitted to transfer your account limit or most of it into a current account. Then you can withdraw the cash from the current account/send a cheque to pay the loan.

You will incur a Balance Transfer fee of approx 3% on whatever you transfer.

whereschris

ok, so just to confirm - do you think it's a good, money saving move? The loan is at about 13% but has all sorts of ins and outs and just seems like a total rip off. She borrowed 3000 and it will cost 4500 in the end. She is supposed to get some cash back at the end but i'm trying to find out if she will get 10 or 25% - big difference in know!

Damm HSBC and their selling tctics!

exel1966

You need to look at the smallprint of the loan and also ask HSBC for a settlement figure as sometimes there are penalties for pulling out of loans early. It's unlikely, but you'll need that settlement figure.

13% is pretty high for a loan and obtaining a 0% card will be favourable to you. Does your g/f have a reasonable/good credit rating as there are no guarantees she will get a card with a large enough credit limit. The current loan will also be taken into consideration when a card company comes to assess a limit for her.

exel1966

You need to look at the smallprint of the loan and also ask HSBC for a settlement figure as sometimes there are penalties for pulling out of loans early. It's unlikely, but you'll need that settlement figure.

13% is pretty high for a loan and obtaining a 0% card will be favourable to you. Does your g/f have a reasonable/good credit rating as there are no guarantees she will get a card with a large enough credit limit. The current loan will also be taken into consideration when a card company comes to assess a limit for her.

To be more precise you're going to need to post the exact figures of how much she still owes, interest rate, any penalties, the exact cashback and when/when it doesn't apply etc.

I'm quite sure though that a 0% card will ultimately save her money.

Mutton_Geoff

> ok, so just to confirm - do you think it's a good, money saving move?

Do three simple sums.

1. Add up all the remaining payments that need to be made to settle the loan.

2. As exel says, ask for a total redemption figure.

3. Look at the cost of paying 2. back via alternative means (a 12 month 0% balance transfer with a 3% fee is roughly equivalent to a 6% APR loan paid off in equal payments over the term).

If 3 is cheaper than 1 or 2 then it's moneysaving.

whereschris

great. Thanks for your help. I'll do the math!