We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.

Newbie here...have I done my homework?

Garbs_2
Garbs_2 Posts: 12 Forumite
Hi there, new member here, hope you can advise me if the homework I've done is correct and is a good idea....or I'm wide of the mark and have got it completely wrong!
I have no credit cards or loans but am looking to borrow approx £7500.
I have seen virgin do the money transfer at 0% for 20 months with a 4% fee.
Virgin have given the ok to this with a credit limit of £3,300.
I have also been approved my MBNA for another card with the same limit but with a fee of 2.5%.
So if I was to 'max' these cards out and only pay the minimum payment each month, I'd only have to pay approximately £60 per month.
Please note, I would pay more than the minimum 1% each month.
Then at the end of the 20 months, I would simply consolidate both cards onto a 0% balance transfer for the longest period available.
Does this sound ok? Am I missing anything?
Many thanks for any help and advice.
I've also posted this in the sticky for credit card loans, apologies for the double post.
«1

Comments

  • opinions4u
    opinions4u Posts: 19,411 Forumite
    1. You may not get the credit limits you want.

    2. You are not guaranteed to get a new 0% card when your first deals expire.

    3. The go to rates may prove expensive.

    4. Always pay more than the minimum payment, even if only by £1. This looks better on your credit report.
  • Garbs_2
    Garbs_2 Posts: 12 Forumite
    Thank you very much for the reply.
    Both cards have said yes to £3300 and £3000 respectively.
    So there is no guarantee that the potential £6300 may be transferable to a 0% balance transfer card? And if not, it could be cards with high apr's?
    Thanks again.
  • one problem will be that if for example you want to transfer say £5k in 20 months time that you will be seen as having 5k of debt which unless you have an income over 20k you wont get a new 5k limit to transfer to
  • Garbs_2
    Garbs_2 Posts: 12 Forumite
    Hi there,
    Thankfully for income is over 30k gross.
  • If you intend to follow this course of action and you have an income of £30k+, why not pay more than the £60 per month? Find out what a loan for a similar sum over the same period would cost you and pay that, or more if possible to drive the debts down.

    It is a nice idea in principle, but you make too many assumptions about your position not changing over the next 20 months. Better to pay it off as fast as possible to avoid getting stuck with high APRs.
    Some days, it's just not worth chewing through the leather straps....
    LB moment - March 2006. DFD - 1 June 2012!!! DEBT FREE!



    May grocery challenge £45.61/£120
  • 27col
    27col Posts: 6,554 Forumite
    Unless I'm missing something the only flaw in your plan seems to be any intention of actually paying off this loan at some point. Feel free to correct me if I have misread something in your original post.
    I can afford anything that I want.
    Just so long as I don't want much.
  • Thank you again for the further posts.....
    I fully intend to pay more than the approximate £60 per month! Would be looking at double that, minimum.
    I would want to pay it off as quickly as possible but without struggling each month with general day to day living.
    The only reason I'm looking at this way of borrowing over a loan is to enjoy the potential interest free way of borrowing.....
    Ta!
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    Garbs wrote: »
    Thank you again for the further posts.....
    I fully intend to pay more than the approximate £60 per month! Would be looking at double that, minimum.
    I would want to pay it off as quickly as possible but without struggling each month with general day to day living.
    The only reason I'm looking at this way of borrowing over a loan is to enjoy the potential interest free way of borrowing.....
    Ta!


    there is no point is paying double the minimum payment; just put extra money in a savings a/c.
    however make sure you can clear the debt in full if necessary after the 20 months.

    and remember that MBNA usually only allow a max of 90% cash advance of the credit limit
  • CLAPTON wrote: »
    however make sure you can clear the debt in full if necessary after the 20 months.

    There is no way I'd be able to repay the full amount after 20 months, it would require a balance transfer to a 0% card....hopefully!
  • Just to keep this forum morally responsible. What's the loan for?

    There may be an alternative way to do things besides maxing out credit cards.
    Bank Loans: [STRIKE]£25000[/STRIKE] £0- Barclay Card 14%: [STRIKE]£2500[/STRIKE] £0- Student Loan: [STRIKE]£12,500[/STRIKE] £0
    Current total [STRIKE]£40,000[/STRIKE] £0:j (100% PAID OFF)
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.4K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 241K Work, Benefits & Business
  • 617.4K Mortgages, Homes & Bills
  • 175.7K Life & Family
  • 254.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.