I'm sure this sounds ditsy

granny-mo

I have never had a credit card yet and rather misunderstand them. I need to get some work done on my house and so either need to get a loan or a credit card. The negatives that I can see about a loan is that I have set repayments and will be penalised if I wish to over pay, so, I'm thinking of getting my first credit card as I have been told that if you get 2 cards you can remove money from one for a few weeks and then transfer the balance to the other one (0%) and close the first account and you don't get charged.

Is this true? Can it be done or is it frowned upon??

Any information appreciated as I can't get my head around credit cards and loans.

keith1950

Hi, what you normally do is to get your 1st card with as long a 0% rate as possible ( 12-18 months ? ) and then when it gets near the end of the 0% rate get another card with a similar offer and do a balance transfer.

I can see that by getting 2 cards together, drawing cash on one, which would attract an interest rate of 25-30% and then quickly transferring it to another card means you initially get the cash and are not then tied in to a high cash withdrawal rate.

Take a note of what the 0% offer involves, there is usually a long 0% timescale for transfers and possibly 6 months 0%for purchases.


Make sure you get both cards with sufficient credit limits before withdrawing the cash because if you withdraw from the 1st card and then cannot get the 2nd card you will be stuck with a balance at a high interest rate.

Also remember that the balance transfer fee is usually 2.5-3%.

SCO

It is very unlikley you will get a decent 0% card if you have never used credit cards before.

Your best option would be to try your bank first. Or use one of the companies that allows you to test if they would accept you on there website, Barclays and Nationwide i think do it.

Pinksparkles26

After having bad credit card experiences i would go for the loan every time. Yes you have a fixed amount monthly repayment but if you have any spare cash save it up so that you can pay the loan off early. Credit cards are a very slippery slope!

granny-mo

Thanks for the information. Not understanding loans neither - I thought that if you paid back early then they charged you for the privelage??

I also read (or saw) somewhere that some banks have a 0% transfer fee for the first few months of you getting the card, so if you transferred to one of those accounts you wouldn't be charged? Or is it the card that you'd be leaving that would charge you 2.5-3%?

keith1950

Hi, there are a few left that have no transfer fee however nowadays most charge around 3%.

Its the bank that receives the money that charges the transfer fee.

If you draw money on the card the promotional interest rate doesn't apply , you will be charged around 25% even if its a 'zero %' card.

With loans you can pay the loan off early and receive early repayment discount, but it has to be paid off in one go, you can't overpay on a regular basis to reduce the balance.