Loan versus credit card

jules68

can anyone help me with some calculations!!!!! please
I have an egg loan at 7.9% apr and was wondering if i would be better off transfering it to an M&S credit card 3.9% LOB
I have roughly
£5000 left at £168 month for just under 3 yrs
Thanks

Pantera_Fan

Hi,

The will settlement figure will be lower than total amount you would pay if you kept the loan so you make an instant saving there.

If £5k is the settlement figure you would need to pay back just under £6k if you kept the loan. If the £5k is the total amount you'll pay back then I'm guessing of the top of my head that the settlement figure would be in the region of £4.2-£4.4k - you'd need to check with provider.

To get the loan on the LOB transfer you'll need to pay the loan off with another card then transfer then that card to the M&S card. If you pay directly with the new card it'll be classed as a purchase. Believe they currently offer 0% for 12 months so that might work out even better; you'll just need to switch the card to a better deal in a years time.

The main benefit of putting the loan on a card, besides the reduced intro APR will the potential for flexible payments if you have a rough month. However, its best to pay off atleast the same amount as you are now or more a month, otherwise it'll take longer to clear and may end up costing you more in the long run.

jules68

thanks for your reply I have yet to phone for a settlement figure. If i was to transfer to LOB say £5000 what is the min payment each month( not that i would pay only that) Is it 5%?

Pantera_Fan

Most of the cards I have are 2-2.5% so £5k would be between £100 and £125 minimum a month.

Some loan providers also charge for paying off on credit cards so check that as well when you call them.