Using credit card to pay off a loan

Pinzy

I'm thinking of tarting..

My loan currently has a rate of 8.9%, which isn't bad, but 0% would be better!

I'm thinking of getting a credit card (probably Virgin), doing a money transfer which will cost me 3% of the bill, but will be 0% for 15 months.

Has anyone done this? How did it work out for you?

Any

Pinzy wrote: »

I'm thinking of tarting..

My loan currently has a rate of 8.9%, which isn't bad, but 0% would be better!

I'm thinking of getting a credit card (probably Virgin), doing a money transfer which will cost me 3% of the bill, but will be 0% for 15 months.

Has anyone done this? How did it work out for you?

Firstly you need to make sure that your loan provider lets you to pay the loan off early. Some companies have early settlement charges!

Pinzy

Any wrote: »

Firstly you need to make sure that your loan provider lets you to pay the loan off early. Some companies have early settlement charges!

Yeah they will, the settlement figure never seems to go down though! Got a quote today - £8300. As you can see from my signature - it doesn't seem to have changed much.

Moggles_2

If you will have savings to pay off most of your credit card balance by the time the 0% period expires, that's great.

The risk in paying off a loan this way is that you can't be sure of another 0% credit card offer with a sufficient credit limit when your current deal ends and the interest rate leaps to anything from 16% to 34% APR variable. For all we know, 0% BT deals may not be around in 15 months time and BT fees could have jumped to 5% or even 6% :eek:

The reason Virgin can afford to lend you money at 0% for 15 months is because, more often than not, customers do not clear the debt and end up paying crippling interest when the promotion period ends. This is the main way lenders claw back the cost of these promotions. If this were not the case, these 0% offers would have dried up long ago.

If 15 months isn't long enough to clear the loan, it may be safer to stick with the fixed rate that you are currently paying

Pinzy

Moggles wrote: »

If you will have savings to pay off most of your credit card balance by the time the 0% period expires, that's great.

The risk in paying off a loan this way is that you can't be sure of another 0% credit card offer with a sufficient credit limit when your current deal ends and the interest rate leaps to anything from 16% to 34% APR variable. For all we know, 0% BT deals may not be around in 15 months time and BT fees could have jumped to 5% or even 6% :eek:

The reason the card providers can afford to lend you money at 0% for 15 months is because, more often than not, customers do not clear the debt and end up paying crippling interest when the promotion period ends. This is the main way lenders claw back the cost of these promotions. If this were not the case, these 0% offers would have dried up long ago.

If 15 months isn't long enough to clear the loan, it may be safer to stick with the fixed rate that you are currently paying

Thanks Moggle, I'm thinking the same thing. Just in case I can't pay it off, as you say, there's no guarantee I'll get another 0% deal.

It's depressing to get a settlement figure, and realise it's the same amount as that which I borrowed in the first place, despite paying well over a grand inbetween.
Well - that's what happens when you get into debt!