Cheaper Loan or credit card

chelsearus

I have a £19,000 over 4 years with Co-Operative, 5.91%.

Is there are cheaper loan or should I switch to a 0% credit card and transfer accordingly.

If I do switch, what is the best credit card, I am prepared to be a card tart.

nh

How much are you paying back each month? And how much could you afford to pay back?

The thing with getting a 0% credit card is you have to switch every 6-9 months, and there is no guarantee that you will always be able to get a new 0% deal.

5.9% is very low, you wouldn't be able to get another loan that low.

You could try to get a life-of-balance credit card. Texaco do them at 3.9% as long as you do the balance transfer within the first month.

To do this though you would have to get an Egg card so that you could get at the money on the Texaco card. You can't normally pay off loans with credit cards, only cash.

You would have to do a BT to Egg from Texaco to put your Egg card into credit, and then do a BT (not a cash advance) into your bank account (Egg are one of the few cards to allow this) to get the cash.

However, beware the rule of 78! This means that even if you pay a loan off early you may still end up paying for all the interest you would have paid if you had continued with the loan.

The first thing you need to do is ring Co-op to see if they will penalise you for paying the loan off early. If they do, what are the penalties and do they mean it is not worth paying it off?

If it is worth paying off, then consider applying for the Texaco card, and get an Egg card too.

You could get a 0% card but only pay off the loan the amount you would be able to pay off the card in six months anyway. ie. if you pay £200 a month and only get 6 months 0%, pay £1200 off the loan with the card, pay the card back £200 a month, and you will pay it off before the 0% ends. But you may be expected to continue paying off the loan at the same rate as previously.

nh

Sorry, Mint Egg and MBNA tend to give the highest limits, but you won't get £19,000 limits I wouldn't have thought.

The more you earn, the higher the limit, to an extent.

My partner earns £50k and got a £10k limit from Egg.

Martinslovechild

You could apply for multiple 0% credit cards with a combined limit of £19,000.

I did a similar thing for my wife, who purchased a new car using a flexible loan. We immediately applied for 3 credit cards and utilised the 0% BT feature of each card to quickly shift the entire loan onto 0%. Ever since this time (2 and a half years ago), we've moved the balance onto different 0% cards just before the end of each deal and are yet to pay a penny in interest.

The single most important thing about doing this is discipline. Remember to make every minimum payment and ensure that you apply for an Egg Card - you'll need this to move money from cards which do not allow SBT's indirectly into your bank account.