Transferring loan to 0% Credit Card?

sfax

Eonel wrote: »

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.

Didn't say that he did have that on offer and didn't advise him to make the transfer. Merely pointed out the scenario under which it becomes more attractive - and also that it is not worth doing to replace a loan at 4.79%. You may be confused and consider it misinfomation but it's really quite simple arithmetic:

£12,000

Transfer to 2 0% for 22 months BT credit cards at 3% using cash advance or credit card cheque with 3.5% fee. Total fees 6.5%. £780.

Pay constant £276.76/month for 22 months
£5911.28 balance after 22 months

3% handling fee on new balance transfer after 22 months = £177.34

£6088.62 new balance with fees

£276.76/month for 22 months

Total fees = £957.34 => equivalent APR is 4.15%

Compared to a loan with a 7% APR over the same period, you'd save £683 in interest

Setup the initial BT as cash without the cash advance fee and you reduce the fees to about £600 and get an APR equivalent of 2.6%.

If you apply for the BT cards and don't get them then you can't do it in any case. Yes, there's a risk after 22 months of not getting a new deal but your £12,000 debt should be halved by then and you will only need 1 BT card not two, having already been accepted for 2 BT cards with £6,000 more debt.

I'm not advising the OP to do it, just pointing out under which circumstances it becomes attractive. And I should know as I have done something very similar recently and replaced a loan with a balance transfer (using a purchase to credit card to generate the "cash" up front)

Blindly dismissing my post as confusing and misinformation adds no value to the thread.

DSJS08

many thanks for all the advice so far, I appreciate it and value all input.

Just to clarify a few things:

1) I was incorrect on the % rate on the loan, it's 6.4% as opposed to 7% as I originally stated.

2) Our household combined income is roughly £47k.

3) There doesn't appear to be any early repayment charge on the aforementioned loan, I've checked the agreement and can't see anything.

It looks like the who crux of the thing hangs on my ability to move this balance onto the 2nd phase of cards once the original card's deals expire. What is the thinking behind me not being able to do this? Are the CC companies not inclined to offer this?

DSJS08

sfax wrote: »

And I should know as I have done something very similar recently and replaced a loan with a balance transfer (using a purchase to credit card to generate the "cash" up front)

.

I'm not sure I understand this technique, would you mind elaborating?

Eonel

The rule of thumb used on this board is that you will have problems getting further credit when your salary to available debt ratio reaches 50%.

Getting another credit card to rollover a 0% deal onto requires you having both credit cards for a short while, so is considered additional lending and your salary-debt ratio can increase a lot. The rule applies per individual, not per household.

We know your household income is 47k, you have 2 *12k loans and a credit card (but we don't the limit, only 2.6k available).

It becomes important what each individual earns & whose names the loans/cards are in. I am sure you can do this calculation yourself & if you breach 50% you should expect to have problems getting further credit cards.

sfax

DSJS08 wrote: »

I'm not sure I understand this technique, would you mind elaborating?

If you have a purchase cashback CC that you pay in full each month (and use it for everything), replace your payments in full with a series of balance transfers (usually 3 but it depends on the terms of the 0% deal). The net effect is that this money that would have been spent as cash becomes credit and it's cost you the 3% handling fee. My average purchase monthly spend is about £1500 so I can generate about £4500 in cash on a BT card in this way. You can also transfer more on the final BT because since the last statement balance, you will have continued to spend and will have a new balance.

Even if this doesn't cover the full amount of BT that you want, it's still worth doing for 1/2 the balance because of the savings over a cash advance or credit card cheque method

sfax

It's important to know in advance exactly how much you will pay each month and where you will be after 22 months. You can then work out your future debt to credit limit ratio and get a better idea of your likely success of a new deal. The key is to have paid off at least half of the debt if possible at this stage.