Paying off bank loan with credit card

Options
Hi Money Saving Experts, I have a quick question regarding paying off a First Direct Loan I have outstanding.

I have 5 months left to pay off a bank loan (about £1200 outstanding) but I was thinking I could save some money by paying off the remaining balance using a 0% interest credit card instead.

If I were to do this, would this be considered a bank transfer or a purchase?

Also, would I simply ring up first direct and give them the credit card number to take the money? Or would I ring the credit card company and get them to clear the debt?

Thanks

Comments

  • zppp
    zppp Posts: 2,476 Forumite
    Options
    naygah wrote: »
    Hi Money Saving Experts, I have a quick question regarding paying off a First Direct Loan I have outstanding.

    I have 5 months left to pay off a bank loan (about £1200 outstanding) but I was thinking I could save some money by paying off the remaining balance using a 0% interest credit card instead.

    If I were to do this, would this be considered a bank transfer or a purchase?

    Also, would I simply ring up first direct and give them the credit card number to take the money? Or would I ring the credit card company and get them to clear the debt?

    Thanks

    I would suggest you call First Direct and find out;

    1. If you can pay by credit card into a loan.
    2. How much you would save by paying it off. (only reason being that there may be very little interest left on the loan if you only have 5 months to pay)

    I would hazard a guess it would be treated as a cash purchase, but this is something you need to confirm with the CC company.
    Best Regards

    zppp :)

  • naygah
    Options
    ^ thanks for the help
  • BognorBoy
    Options
    If you just phone up First Direct and tell them that you want to pay the account off by credit card it will be processed as a card transaction, not a balance transfer. Depending on what credit card you have this could be fine, not great or disasterous!

    It would be fine if you have 0% on purchases as well as balance transfers on your credit card (not likely).

    It would not be great if, like most credit cards, it counted as a normal purchase and you get charged your normal purchase rate.

    It would be terrible if, like with using your card at say the bureau de change, that instead of being charged at the purchase rate, you got charged at the cash rate.

    The most likely of the above options is that it will come out at the purchase rate.

    The way to avoid this is, as someone else advised, phone up the credit card company and give them First Direct bank account details (for the loan) and your credit card refence number so they can BACS the funds accross to First Direct as a balance transfer rather than a purchase rate.
    Total Debt - 1st Jan 2010 - £23,450
    Total Debt - 1st Jan 2011 - £19,390
    Total Debt - 1st Jan 2012 - £16,113
    Total Debt - 1st Jan 2013 - ???

    :money: :money: :money: :money: :money:
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.7K Banking & Borrowing
  • 250.3K Reduce Debt & Boost Income
  • 450K Spending & Discounts
  • 235.9K Work, Benefits & Business
  • 609K Mortgages, Homes & Bills
  • 173.4K Life & Family
  • 248.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards