Large purchase Whats the cheapest way to buy?

calamity_brain

Hi There, I'm a newbie to this forum, but think the info on this site is outstanding!!
My question is this: I want to buy a conservatory, but don't have the upfront cash to do so. I don't really want to take out a loan, but thought I could maybe purchase the conservatory on a 0% purchase card, then keep transferring the balance to other 0% credit cards as I go along. I am quite good at keeping an eye on my finances and feel I will be fine with this method of paying for the conservatory. However, I 'm not sure if there are any major pitfalls I may be unaware of...? If anyone could give me any pointers, that would be fantastic!!
Bye for now!

Debs

Joe_Bloggs

@calamity_brain
The cheapest way to get your conservatory is to save up for most of it then try and pay for it with a 0% purchase card. Future, fee free, 0% balance transfers are very rare,these days, so you cant move your original 0% debt on without an instant, uncapped fee of 2.5-3%.
You can earn interest as you save up the money, perhaps in a regular high interest saver. You can earn more interest/save more while the money is on the 0% card. Just before the 0% purchase deal expires you pay it off from savings keeping the interest. This is termed a slow stooze. I'm slow stoozing my council tax and the majority of my normal spending at present.
J_B.

calamity_brain

HI There Joe_Bloggs,

Thanks for the swift reply!

I have been checking up on the balance transfer deals around and there seem to be quite a lot of cards that offer fee free deals? Am I being naive here and is there a lot of small print I'm unaware of? Thing is I really wanted the conservatory in the next month or so as I have a family event occuring at the end of September and wanted the use of the conservatory for that.
I'll be so disappointed if I can't find a way to finance this without having to go to a loan company and paying even more for the conservatory....
Maybe the information I've been reading is out of date now? I even read up on this site that 0% balance transfers are available...?? Am I reading this wrong then?? I'm really not sure now....

Anyway, thanks for replying Joe_Bloggs, much appreciated.

Kind regards
Calam

mattbass

That depends what sort of fee free deal you are after.
As Joe Bloggs says the best way would be to purchase using a 0% 9+months credit card. This should be fee free. At the end of this period if you still have a balance to transfer to another deal this is when you will feel the fees.

Joe_Bloggs

There are lots of 0% balance transfers. Advertising regulations allow them to bury the fees that they charge to move the money from one card to another. In the old days these fees were either nothing or 2 to 3% of the total and capped at £35 or £50 now they are uncapped. It may make financial sence to take on these deals if you are paying a considerable rate already.
Some lenders are very sneaky. The 2-3% charge is treated differently than a transfer and attracts a very high interest rate that cannot be paid off until the 0% bit is cleared.
This is all after you have got you 0% purchase card and paid your builder and then, later on, applied for a balance transfer card.
My 12 month 0% purchase card took close to four weeks to come through. It is a risky strategy made less risky by having some savings in the first place. I can't quite see a builder accepting a credit card. I'm sure some do however. Can you hire a tent or a function room at a different venue ? Good luck with your event.
J_B.

calamity_brain

Hi again JB

I found this card on this site: GE Money Transformation Card This allows 0% interest on balance transfers with a transfer fee of £25 per £1000 transferred. This is capped at £50 so although you do pay a fee it is not too extortionate. This would still be a cheaper alternative than taking out a loan for the full amount. I would all the while be paying off as much of the initial amount as I could at say £200 per month. I realise that this is not a great strategy and will carry some risks..especially if credit card companies get even more fee frenzied in the future. But it would also be a short term solution to getting the debt reduced until such a time as I maybe had no alternative but to take out a loan to pay off the remainder of the money. I know I'm probably making no sense, but I am trying to make sense of this before I leap into it. It seems fairly straight forward to me, but I must admit I am worried that there will be some great pot hole I will end up falling into.
Just to clarify JB, did you say that the 2% fee for the balance transfer will end up being added to the transferred amount, as if it were a purchase on that card, therefore ending up having interest accrued on it? As would happen if you made purchases on a balance transfer card - as I am aware this action is obviously a great big NO NO and I would be very alarmed if they were allowed to do this... Or did I get the wrong end of the stick there?

I am babbling, but I hope you can see what I'm getting at....

Calam

Joe_Bloggs

@calamity_brain
By reading the posts on this site you can see and avoid the pitfalls that others have kindly documented. You never mentioned how much this conservatory is estimated to cost. That GE card looks very good. The trouble with the best cards is they may be hard to get hold of, given the demand for them. The credit limits you get may be of limited use.

You have nothing to lose by applying for a 0% purchase card as the slow stooze can save you money in other areas.

Watch out for payment protection insurance. Often it is 78p per £100 per month. This works out over 9% per year. Often it is treated so you can't pay it off first, or even worse, a cash advance.

Terms and conditions vary from lender to lender. The essential detail is in the fine print. The lender reserves the right to change the fine print at any time and to make it as confusing as necessary. Egg are a classic case in this aspect.

If you have savings you can play card games with these companies and walk away when the tables are turned. If you don't have savings, miss a payment, you can lose your 0% deal and blight your credit record, costing you a lot more in the long run.
Don't assume any new direct debit, to make a minimum payment, will actually work first time. Make an additional BACS or debit card payment just in case.

J_B.

calamity_brain

Thanks J_B,

You have been very helpful...

Just wondered if you could clarify - is it normal practice for the CC company to put the 2% balance transfer fee onto the balance transfer card? Or did I get that detail wrong? If you could let me know about that detail, that would be of much help to me.

I take on board your comments about double checking the direct debit payment goes through. Banks have many many sneaky ways of squeezing cash from customers. I have dealt with some very slippery ones in the past - must admit though..I've often come out on top! (And now that I've typed that...it sounds a bit naughty - but hey ho..there's room for humour in the world of finance, I'm sure!) Lolol...

The credit limit I'd have been looking for would have been around the £6000 mark. But I could reduce that some if need be.

Many thanks for all your help J_B. : -)

Calam

Oh...ps. The conservatory company don't normally accept credit cards, however, I weaved my magic and they are going to arrange it so I can pay via this method. I would not have got a builder to go with this I'm sure. Only downfall is..the conservatory company want me to pay the fee that they are charged for using the credit card as payment. This should only be around 2%, but thats still preferable to taking out a loan, as it's only 2% of the full transaction amount, not a per annum amount...

Joe_Bloggs

It is normal practice to put the balance transfer fee on the card. There is not normally any other obvious option for the lender. Some lenders restrict the percentage of the credit limit you can transfer to allow for these fees, say 95%. Not all lenders are rogues, so your terms and conditions may be more favourable than the worst case ones I have outlined.

With many lenders the minimum repayment is 3% per month. This could be initially £180 per month on £6K, falling slightly each month, to keep the interest rate at 0% until the 0% period ends. The good news is that all of these payments reduce the capital. You can work out what you have to shift to a new card in advance. The bad news could be that the credit limit on your existing card may count against you getting such a high limit on a second card. You might need a third card to transfer the rest to. It is a bit of a lottery.
The whole point of 0% deals is to trap you with fees or on a high interest rate!
J_B.