Should I use a 0% purchase card to pay off a loan?

Spacegal246

Hi,
I've read through the articles on credit card savings, but I'm still a bit confused. So I hope someone can help.

I have a loan for just over £5,000 which I have only recently taken out at an APR of 6.7%. But within the next month I'm going to get a lump sum which would more than allow me to pay it off.

I was thinking of putting the money I need to pay off the loan into an instant access, high interest savings account (5% AER). Then using a 0% on purchases credit card like Sainsbury's to pay off the loan.

After 9 months I would then use the money from the savings to pay off the credit card and keep the interest earned.

Is this a sensible thing to do - and if so how do I use the credit card to pay off the loan?

YorkshireBoy

...how do I use the credit card to pay off the loan?

You won't be able to settle your loan with the Sainsbury's card - you need a card that offers Super Balance Transfers (SBT's). Check out the Super BTs article.

Check there aren't any excessive early settlement penalties with the loan. If you do have penalties, factor these, and the balance transfer fee(s) on your SBT card, into your calculations.

maforduk

Also, with the saving's account, are you allowed to withdraw money out of it?

Bokken_2

Spacegal246 wrote:

Hi,
I have a loan for just over £5,000 which I have only recently taken out at an APR of 6.7%. But within the next month I'm going to get a lump sum which would more than allow me to pay it off.

:

I can see where you are comimg from in my opinion I wouldn't muck about stoozing while you have a loan for 5K outstanding ,pay the loan off.
Then go ahead and do some stoozing using credit cards to provide the money for the stooz.
How recent is the loan?are you still within the 30 days if so cancel the loan by the time the ammended paper work arrives you might have the money you are expecting is this likely?
If you keep the loan for 9mths and then try to pay it off you are going to incurr some form of early settlement/full settlement figure added to the original sum the amount may well be greater than the sum you have managed to stooz for the 8.5mths
http://www.stoozing.com/
also have a look here it may make things clearer.

Spacegal246

I'll go and try and make sense of the Super BT article now - so thanks for directing me on the right path Yorkshire Boy.

And yes, maforduk, I was thinking of using an instant access savings account, so I shouldn't have trouble getting hold of the money.

Thanks for your help.

maforduk

The plan will work, it's just the charges then in that case that may stump you for any big saving overall.