Transferring loan to 0% Credit Card?

DSJS08

Apologies if this has been asked a thousand times...

I have an unsecured loan with NRAM that goes up to a silly rate if I move my mortgage away from them. Negative equity dictates I might not be able to cover the loan if I sell my house.

Faced with that should I consider moving the loan to a 0% card, and if so who (if anyone) lets you do that?

I'm thinking I should be able to borrow against a 0% card for nearly 2 years and then transfer that from my my account onto paying off the old loan. Then, (taking into account one off charges for taking out the new loan), be dramatically better off as I won't be stung for the normal monthly interest charges. Therefore able to pay off the loan much quicker.

Are my maths right?

CLAPTON

One can't, in general 'pay off' a loan with a credit card unless NRAM allow such a deal.

Some CC allow you to BT to your current a/c and then of course you can use the cash to pay off the loan; these are mainly from the MBNA stable.

How much do you owe NRAM?
Do you have other debts?
Do you have a CC already?

DSJS08

Thanks Clapton.

The concept of transferring via my current a/c is exactly what I was getting at.

In answer to your questions:

How much do you owe NRAM? - The unsecured loan is for £12k.
Do you have other debts? - yes about a further £12k with a HSBC loan (a higher interest rate than the current NRAM one unfortunately).
Do you have a CC already? - Yes but there's nothing hardly on it. It's a 0% with about 12 months to run on that offer (Virgin).

CLAPTON

well, without knowing your income, I'ld say it was unlikely that you will be offered a credit limit of 12k

does you Virgin card offer a 0% balance transfer to your current a/c?

CLAPTON

for BT transfer to bank a/c cards see


http://www.stoozing.com/sbt.php

DSJS08

Thanks Clapton. You are heading for God status already. :O)

So, I might not get a £12k limit, but it would certainly help the overall cause by attacking a sizeable chunk of the debt (say £3k). Do you agree with that?

I'll look into the t&cs on the Virgin card.

DSJS08

OK, looking at my Virgin card it appears that they are offering
0.0% until 12 September 2013 on all Money Transfers completed before 31 October 2012. A transfer handling fee will apply of 4.0% of the transaction (minimum of £3.00).

I've got £2600 left on that card until I hit the limit and the small print says I should be able to use upto 95% of that for a transfer.

I'll do the maths, but on first viewing this looks like a good option. That's providing I pay off the balance within a year (or transfer it elsewhere). I guess I need to factor in any future balance transfer charge if I have to opt for the latter.

Am I missing anything?

Eonel

The balance transfer isn't free - it's going to cost you a 4% fee for 11 months which is probably cheaper than your NRAM rate.

What you do need to consider is what happens after 11 months. With your other loan balances you may well not get another 0% card.

So you need to compare your Virgin standard rate with your NRAM rate to see what gives you the best deal over the rest of the term of the loan.

DSJS08

Yes, you are right in that the NRAM rate is 4.79% so marginally cheaper. I may consider paying off some of the other loan I have instead at 7% instead to get the better value.

Just checked my credit rating with Experian and I'm sat comfortably in the 'excellent' bracket so may have some room to extend my Virgin card ceiling.

sfax

The BT route is really not worth the hassle to replace a loan at 4.79% but at 7% it becomes worth doing if you can get 22-24 months at 0% with a 3% handling fee. The problem is getting cash as the best 0% deals are only for transferring from another credit card. If you spend a reasonable amount each month on a debit card, you can switch all of that spending to a credit card and then transfer multiple times (you can get 3 months of transfers with Halifax for example). You then effectively get cash at 3%. For the remainder you get a cash advance or credit card cheque and then transfer the balance but this will cost you about 6%, albeit over 22 months so APR 6.1%. This becomes much more attractive if paid off over 4 years if you consider a second 22 month deal when the first one finishes (when you would only pay 3% on half the balance)

Eonel

sfax wrote: »

but at 7% it becomes worth doing if you can get 22-24 months at 0% with a 3% handling fee.

This is not what the OP has on offer + there is other confusing & misinformation in your post. His offer is 4% fee for 11 months 0%

OP already has 24k of loans + £2600 available balance left on a credit card. He does not disclose his salary, but is at high risk of not being able to get a further 0% deal in 11 months time as this would be considered additional lending.

With the information available, I would advise OP not to transfer his balances to a 0% card. 4.79% and 7% are reasonable rates for his loans and his credit card rate could well be 20%+ after the 11 months.