Using credit cards as a loan —all at once?

EssentialParadox

I'm in the process of starting a business and will need 13k in capital over the first year. I have determined the most efficient approach could actually be to get a 'loan' via credit cards using Martin's excellent guide on Super Balance Transfers.

I have excellent credit history and I became an expert at credit card juggling a few years ago to build another company that became profitable, but I never juggled this much last time. Leading to this question I have running in my mind: I'm wondering if taking out half the credit card 'loan' with say £6k to start with, and then having that as debt, would harm my likelihood to get a new credit card 6 months later for the other half of the money needed, and if so should I consider trying to acquire it all right up front? My only issue with the latter route is that some cards give me a £1000 limit, while others give me £6k, so I may need to apply for several cards to reach that 13k, and I dont want to risk that many card applications in a short period.

It's a bit fiddly. Anyone who can offer any advice?

ironlady2022

It's very much dependant on your income and current circumstances. Do you owe anything on credit cards? Do you have one? Any outstanding loans? 13k limit be it on 1 card or several cards would be hard to come by. Also only a few do the super balance transfer cards.

Consumerist

As a broad rule-of-thumb, banks tend to look at your total access to credit compared to your income when assessing credit limits. They tend to offer no more than would bring your total access to 50% of annual income. If you are self-employed then it is likely to be lower than 50%.

Your access to credit is the total of all credit-card limits, overdraft limits and loans outstanding. If, for example, you have several credit cards which you are not using then it might be worthwhile to cancel some so as to reduce your overall access to credit before you apply for more. You are not likely, however, to be able to re-apply for cancelled cards for at least six months.

EssentialParadox

Thanks Mayling and Consumerist, that's really helpful info. So the more I can lower my current total credit limit (15k), the higher limits I'll get on new card applications?

If that's the case, I'll cancel one card and try asking if my other 2 cc companies will let me lower my other credit limits — I've never asked to lower a limit before, but I assume they'd let me?

I also currently have 1500 outstanding as a 0% balance transfer on one card, though I know they don't discriminate if it's a 0%, so would it be a benefit to clear that off? I'd rather not as it's a long 0% period, but if it would make a substantial difference to my applications or the limit they'll offer me then I'll get rid of it.

ironlady2022

Yes they will allow for lowering of limits. Who are you with? As MBNA nomally have offers from time to time like balance transfers and in this case super balance transfers. They will not discriminate a 0% but will take the 1500 debt on your card into consideration. Think about it, if that is cleared then that allows for the new cards to offer that limi to you if you close the 1500 one down. It can be a bit confusing. Best thing is to list your credit cards and limits and anything owing on them on here.

EssentialParadox

Halifax Clarity - £5,500 limit - received a month ago, used for traveling
Barclaycard - £6,000 limit - used as primary purchasing card and cleared in full every month
Barclaycard Gold - £3,000 limit - unused (thinking of cancelling)
MBNA Amazon - £1,500 limit - £1,450 outstanding debt at 0% until September

What I'm aiming for is a card(s) with 16-18 months 0% money transfer and!£16k total credit.
So the options I'm currently studying are:

1) MBNA platinum or Virgin credit card = 0% money transfer into bank for 16 months (4% transfer fee)
2) Use an Egg Money credit card to do money transfer into bank then balance transfer to:
- Barclaycard Platinum = 0% balance transfer for 18 months (2.9%)
- Nationwide Credit card = 0% balance transfer for 17 months (2.95%)
3) MBNA rate for life card = 5.9% interest for life
4) A combination of several of the above.

EssentialParadox

Okay, I've reduced my Barclaycard limit to £1500, and today I was planning to lower my Halifax limit to the same and also cancel my Barclaycard Gold and clear the Amazon card debt. Before I do so, is this definitely the right route to go?

izools

EssentialParadox wrote: »

Halifax Clarity - £5,500 limit - received a month ago

Unfortunately this is going to reduce your chances of getting a decent card elsewhere, as it will be considered a "new" account - and a lot of creditors don't like to lend to applicants that have less than 6~12 months repayment history on all of the accounts they hold.

What is your annual salary? It'll need to be £30~£35K+ to be in with a glimer of hope for getting £13K somewhere, possibly more.

How old is your oldest account? Before applying elsewhere, consider closing the newest accounts and leaving the oldest one open - to offset the "instability" factor that the Halifax Clarity card will have introduced to your credit file.

Good luck!

EssentialParadox

Gosh. Had no idea getting the Halifax card would prevent me getting another card for such a long time.

Well my annual earnings are £36k so hopefully that will help somewhat. My oldest card is my Barclaycard, which I've had for 3 years but I've been a Barclaycard customer for 6 years spread among a couple of other closed cards. Accounts with everyone else have been relatively minimal.

What do you suggest I do izools? I am hoping my Barclays history will make it likely they'll give me a high limit platinum card, but that's just a secondary option as they only offer a 0% balance transfer and I need a transfer into my bank account really, which leaves MBNA.

I need to be careful to make the right decisions as I only have two months to engineer this heist!*

(* joke! —for any credit agents browsing the forums! )

izools

Well like I say, if I were in your position, I'd close the two youngest cards bar the Clarity card - so the MBNA card and the younger Barclaycard.

Now do note that this will take 6-8 weeks to reflect on your credit file so don't expect this to happen before easter. You'll need to get the accounts closed and paid off ASAP and check your credit file regularly to ensure they actually show as settled before applying elsewhere.

Then hit up MBNA for the Rate for Life card or whichever you prefer, if the limit is not enough, you'll need to go down the personal loan route.

Good luck!

EssentialParadox

Thank you, izools, I'll go ahead and do that. And do you recommend changing the Clarity £5.5k limit at all?