Paying off chunk of loan with 0% credit card

grecian9

I have about 4.5K on a cahoot flexible loan account (6.6 %). I was planning to pay off a chunk of it with a windfall I received earlier this year but didn't manage it as I am a new home owner and costs have been higher than expected. I had taken the flexible loan rather than the normal loan (5.6%) for this exact reason.

My finances are now getting stretched more than ever and I am thinking about paying off a chunk of the Cahoot Loan with a 0% credit card to try and reduce the amount of interest I pay in total. The main problem with this is working out the amount to pay off as I would now have 2 payments to juggle.

Is this wise? Would it be wiser to attempt to put the whole amount on a 0% card and then do consecutive balance transfers? I guess it depends on the amount of credit I was offered by any credit card provider. Previously I have been offered around £4k but only after a period of time.

I have just had 6 months off credit cards after 2 yrs of balance transfers with three providers. My credit rating is pretty good although I got refused a loan from Northern Rock on December 2005.

Any advise appreciated...

Sea78

Hmmm...I don't know about this one. Some might say you would be better with 0% cards, but then if you were refused more or had unexpected expenses, you might end up paying min payments only and ending up with a worse % rate. How are things getting stretched? Can you not afford your cahoot loan payments? In which case I doubt getting another payment on top would help, even if the original payment reduced.

Why don't you post a SOA (see sticky at the top) and we'll see what we can do to help free some other money.

Sea xx

in*the*red_6

Hi

Your Cahoot loan rate is actually pretty good, mine has just gone up to 8.9%! That said, the more you can reduce your APR the faster you will pay your debts off. If your credit rating is good I wouldn't think it unlikely that you would get over a 4.5k limit if you request it.

However, the 0% balance transfers mostly seem to be attracting a fee (although I think this is usually capped at about £50) and if you have to keep tarting you'll be paying this every 9 months or so. Have you thought about a life of balance credit card? Think the lowest is IF at the moment, 4.95%? Transferring a loan to a credit card isn't completely straightforward though so have a read of Martin's article on how you can do it.

HTH

Jessiepig

Would you be able to give Martins link as I am unable to find it. Thank you.

CLAPTON

its always a good idea to reduce the amount of interest being paid, but your most important priority is to ensure that you dont allow the new house to cause you to borrow any more. houses are a terrible sink for money especially as you naturally want to redecorate and buy new things for it. obviously i dont know your circumstances but parhaps you should consider trying to increase income and contain spending and pay off the debts sooner.

in*the*red_6

Jessiepig wrote:

Would you be able to give Martins link as I am unable to find it. Thank you.

Hi Jessiepig
It's on this page.http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1094822880,81886,

bristol_pilot

Why not get a card that gives 0% on purchases and use that for all your everyday spending. Then throw the money you would have spent on food, petrol etc at your flexible loan. That way you will not pay a BT fee.

Jessiepig

Thanks in*the*red. It took a while to understand this but got there in the end. I think I will look into doing this.:j

In_Search_Of_Me

Careful doing this as the money you've accrued on 0% still has to be paid off and you need to weigh up how good you are with credit cards...I tried this approach and ended up with 7000 credit card bill...Can you overpay your loan? Its a tricky one...alterative is to save money & try & pay the loan off earlier...

in*the*red_6

fishface-69 wrote:

Careful doing this as the money you've accrued on 0% still has to be paid off and you need to weigh up how good you are with credit cards...I tried this approach and ended up with 7000 credit card bill...Can you overpay your loan? Its a tricky one...alterative is to save money & try & pay the loan off earlier...

Hi FF

Good point, I didn't make it clear that I wasn't planning to shift to 0% but to try and get some of the loan on to a lower rate life of balance card which is why I am looking at this option.

ITR

Toto

That's a great rate for cahoot. Mine just went up to 11.9%:mad: There doesn't seems to be much formula to Cahoot's rates, it's almost like they pick your rate out of a hat, it's that random, everyone has different.