Paying off a loan with a new credit card?

rawkinrich

Hi all,

I have a loan that I'd like to pay off. My circumstances are quite good, though I would like to get the loan paid off sooner than later. I'm living at home and as soon as the loan is paid and I have some money in the bank I am 100% debt free - then I will be looking for my own place.

I'm thinking that a good way to accomplish this is to get a credit card to pay off the loan, pay the minimum payment (£25 or whatever it is) until I've saved enough to pay the credit card off in full. This shouldn't take long, then I have the credit card to keep my credit ticking over.

My question is, which credit card should I go for? I need one that doesn't charge a bunch for taking the money off the credit card to clear the loan, and a bonus would be 0% on purchases for so long.

Am I on the right track?

Thanks all
Richard

Tixy

You'd need a card that allows super balance transfers to move the money into your current account to then pay off the loan - a list is here - http://www.stoozing.com/sbt.php
This shows the fee to do a money transfer and the 0% period.

Whether you would get such a card with a high enough limit will depend on your credit history/ existing debts/ existing credit levels and accounts/ income etc.

How much is your loan balance? Have you checked to see that there are no early redemption penalties? What APR do you pay on that? are you confident you could pay off the full balance before the card reverts to charging interest, which may be at a much higher rate than your loan.

rawkinrich

Tixy wrote: »

You'd need a card that allows super balance transfers to move the money into your current account to then pay off the loan - a list is here - http://www.stoozing.com/sbt.php
This shows the fee to do a money transfer and the 0% period.

Whether you would get such a card with a high enough limit will depend on your credit history/ existing debts/ existing credit levels and accounts/ income etc.

How much is your loan balance? Have you checked to see that there are no early redemption penalties? What APR do you pay on that? are you confident you could pay off the full balance before the card reverts to charging interest, which may be at a much higher rate than your loan.

Many thanks for your reply.

To clear the loan is just over £2100 (includes all fees). What I can do is pay a small amount on to the loan to make it less than £2000.

I am very confident I can pay the full balance before Christmas.

Is the link you provided still valid for my circumstances?

Tixy

Is the link you provided still valid for my circumstances?
Should be worth looking at. Though only people with very good credit ratings seem to be getting 0% cards at the moment. And there have been some people who have been successful but then been given a low limit - you can usually only transfer 90-95% of a limit so to clear a £2k loan you'd need a slightly higher limit.

You could certainly try applying but without knowing more about your finances its not possible to guess whether you would be successful. But a word of advice if you try and are declined don't keep applying for lots more, instead try to work out why you may have been declined first.

CLAPTON

if you can clear the loan by christmas is it worth paying the BT fee instead of the little bit of interest you might pay otherwise

rawkinrich

Many thanks all.

Any

Clapoton makes very good point... Is it worth paying up to 4% balance transfer fees on the card and early repayment charges on the loan if you can pay it by Christmas??

What is the APR of the loan??

rawkinrich

Not sure what the APR is off the top of my head! I think you're right though - it's not worth the Balance Transfer fee. I'll wait and just pay the loan off in full.