Credit Card or Loan?

ovenangels

I have just purchased a car £3000 on my Halifax One Card 0% until 25 Nov 2004
My question is this, should I just jump from 0% to 0% Card, or go for a life long balance transfer card, or a low cost fixed loan?
Im looking to repay aprox £100 per month
Is there any difference in principle between a loan and a Credit Card?
Also what is the difference between PA & APR ?

System

No advice from me i am afraid, but i wanted to say welcome to the boards!!!

Debt_Free_Chick

Two very important differences. A loan is inflexible. You pay a fixed amount over a fixed period of time, so you can't bung an extra amount in when you have it.

Also ... you won't get a 0% finance loan from any commercial lender.

The danger with the CC is that you are tempted just to pay off the minimum in some months, thereby extending the term.

If you can go with 0% cards and pay off extra from time to time, you should be able to pay off the debt quicker and avoid interest. But you must be disciplined

DiggingOut

Debt_Free_Chick is exactly correct. If you just make the minimum payment, you could get caught out eventually, because you keep the debt going and going.

However, I would disagree with her on one point. I would start a savings account, and instead of paying extra on the credit card, I would pay extra into the savings account every month. Since they are loaning you the money at 0%, why not put it where you can earn interest for yourself?

Once your savings account catches up to your credit card debt, you are safe -- if you run out of 0% offers, you can always pay off the debt with your savings. Now you have their money in your account earning interest for you while they are loaning it to you for free. You will have become a credit card tart -- earning free money from credit cards. ;D

ovenangels

I see what you are both saying.
But the min repayment the 0% cards ask for is
aprox 2 or 3%, so if this is the case then,when I pay say
3% per month (as ask for by the card company) I am in fact paying of 3% of the debt, because there is no interest.
Or have I missed something?

DiggingOut

No, you aren't missing anything. But if you only pay off 3% of the debt each month, the debt stays large for a long time.

They offer 0% to get you in debt to them, and they keep payments small so the debt stays large. The danger is that you will run out of 0% offers, and you are then stuck with debt at a high interest rate. So you want to be either reducing the debt more quickly than the minimum payment or making provision to reduce it by building up savings.