Paying off student loan with a 0% credit card - good idea?

Tirian

I have reached the stage where I have approximately a year's worth of payments left to make on my student loan. I already have more than enough savings to pay it off fully, but since they're in a cash ISA, I make more interest on them as savings that I pay on the loans so I have left it at that.

However, it occurred to me recently that if I got something like the M&S or GE 12 months 0% credit card, and used that to pay off the balance of my loan, I could then just make payments on that for the next year and effectively pay off the rest of my student loan without accruing any more interest on it.

Is there any reason why this would not work?

Tirian

Jersy

because your so close to the end i wouldnt even bother

it only increases at the rate of inflation, so id pay it off fully if i had the cash.. but in your case with the ISA id just leave it and pay it off as you have been doing


with the credit card idea.. should you miss repayments then interest would be expensive,

at lease this way it comes out of your salary before you get it!

Tirian

Jersy wrote:

because your so close to the end i wouldnt even bother

it only increases at the rate of inflation, so id pay it off fully if i had the cash.. but in your case with the ISA id just leave it and pay it off as you have been doing


with the credit card idea.. should you miss repayments then interest would be expensive,

at lease this way it comes out of your salary before you get it!

Well, I could set up a direct debit to make the credit card payments - my loan payments are taken from my bank account, not my salary, so that would be no different.

Inflation doesn't come into this - the fact remains that if I put the remaining amount onto a zero interest credit card, I pay back less money than if I carry on making normal payments. Inflation or not, it's better to pay less, right??

I guess that really, I know that I want to do this. The only questions I have are:

a) will the Student Loans Company let me pay off my balance using a credit card?
b) will the M&S or GE zero-interest for 12 month deals count that payment as qualifying for zero-interest? (i.e. no 'balance transfer fees' or sneaky catches like that)?

If so, then it makes complete sense to do it ..

grumbler

Tirian wrote:

...a) will the Student Loans Company let me pay off my balance using a credit card?

I think, the answer is NO. You need either a SBT card or an extra 'mule' card. Did you read Martin's articles?

b) will the M&S or GE zero-interest for 12 month deals count that payment as qualifying for zero-interest? (i.e. no 'balance transfer fees' or sneaky catches like that)?

No way you can pay your loan by a CC with a 'purchase' transaction. The only possibility is 'balance transfer' and you still need a 'mule' card.
M&S:

...0% interest on all shopping ... for 12 months
Fee free balance transfers at ... 3.9% p.a. for the life of the balance

What is your student loan APR?
GE Money Transformation Card :

0% p.a. for 12 months on balance transfers (2.5% hadling fee) and 0% p.a .for 12 months on purchases.

Tirian

grumbler wrote:

I think, the answer is NO. You need either a SBT card or an extra 'mule' card. Did you read Martin's articles?
No way you can pay your loan by a CC with a 'purchase' transaction. The only possibility is 'balance transfer' and you still need a 'mule' card.
M&S: What is your student loan APR?
GE Money Transformation Card :

Well, that's all I needed to know I guess

I think that the interest on the student loan is a little above 2.5%, but not enough for it to be worth the effort. It's certainly less than the 3.9% M&S balance transfer rate.

Extra 'mule' cards are not a problem - I have two credit cards with nothing on them, which I only use rarely and pay off immediately, so they're both in good standing with over £2000 credit limits.

But without a fee free balance transfer to a 0% deal, there's no point.

Tirian

I suppose there is one way it could possibly be done ... if I can team up with someone who wants to buy an expensive TV or something. I buy the TV on my M&S card in exchange for them paying off my loan.

If I hang around outside Bang and Olufsen, and beg politely, maybe someone will oblige :rolleyes:

Tirian