Pay off personal loan with 0% credit card?

LongTooth

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Hello,

I'm new to this money 'game'...

Can I pay off a Lloyds TSB personal loan with a 0% credit card?
I read the article about the Sainsbury 0% for 12 months, and wondered if such a card could do the trick?

If not, how can I reduce the ridiculous interest i'm paying on this £2k loan?

Thanks for any pointers.

realaledrinker

Firstly, can you repay your loan account early without penalty. I suspect not. You will need to calculate whether you can save more in loan interest over the interest free period than you will pay in early repayment penalties.

Secondly, you would need to get the credit card money
into your current account so you can pay off the loan. Sainsbury can't do that - egg credit cards can do, but only 6 months interest free.

Thirdly, can you repay you debt to the credit card company over the term of the interest-free period. If not, you will need to look for another 0% deal to enable you to move the debt on to. Not necessarily that easy if you are struggling to service a £2K debt at the moment.

I would suggest contacting the Citizens Advice Bureau before trying to rejig your finances as they will be able to draw on a wealth of similar experience to your own .

Good luck.

LongTooth

Hi,

Thanks for the reply.

I'll check about early repayment penalties, if any.

I'm not struggling in any way to pay off this loan, but why pay interest if you can avoid it?

I'll apply for an egg card and take it from there.

Thanks for the advice.

Martinslovechild

Longtooth,

I've been doing this for ages. I move the debt onto different credit cards once the end of the 0% period is nigh. Apart from the first month (when I was waiting for the first few cards to come through), I've not paid a dime in interest.

This has saved me nearly £4000 interest in total - not an unreasonable amount considering

The important thing is to note down the dates of 0% expiry and apply for further card(s) about 5 weeks before this date.

LongTooth

Hi,

Thanks for your more positive advice...

Having successfuly applied for an egg card today, I now have to transfer the loan.
I'll call Llloyds TSB Monday to see about penalties on my personal loan, if any.

Worth noting: the egg card, despite having only 6mths at 0% for transfers, can be used to transfer balances from other cards, loans, and overdrafts.

LT

Martinslovechild

Worth noting:  the egg card, despite having only 6mths at 0% for transfers, can be used to transfer balances from other cards, loans, and overdrafts.

That's correct LongTooth.

In fact - when it comes to the end of the 0% term with Egg and you've transferred this balance onto another 0% card, make sure that you DO NOT cancel the Egg Card BECAUSE... the Egg Card is fantastic for stoozing because it's one of the few cards that allows SBTs (Super Balance Transfers), i.e. you can move money into your current account.

For example, let's say you obtain a new 0% card with Lloyds TSB (£10000 limit) and both this card and your Egg Card (£15000 limit) have a balance of zero.

1. Balance Transfer the entire credit limit of your Lloyds card (£10000) to your Egg Card.
Lloyds Card now £10000 DEBT
Egg Card now £10000 CREDIT
2. Now BT £10000 overdraft to Egg Card
Egg Card now £0 again
Current Account now £10000 up.

So, you've now got £10000 at 0% on the Lloyds card and £10000 to invest in your current account.  All you then need to do is make the monthly minimum payments on the Lloyds card and invest the £10000 in a savings account (12 months @ 5.5% = £550 gross).

Even better, if you have a flexi mortgage, then drop the £10K in there.  If your mortgage rate is 5.5%, then this is the equivalent of saving £687.50 as a basic rate tax payer, or £916.66 as a higher rate tax payer.



Loads more info on stoozing at https://www.stoozing.com