Credit card transfer to pay off loan

thescouselander

I've been thinking about ways to save a few £££ on a loan I have. Basically I have a regular saver account that is about to mature and this will cover at least half of my car loan.

I was thinking that if I could pay off half the loan with my savings and transfer the other half to a 0% credit card I could pay the rest off over the course of next year saving a good bit in interest.

The problem is most deals seem to only let you transfer a balance to other credit cards and transferring money to a current account seems to incur more punitive rates and charges.

For info the interest rate on my loan is 7.5%.

Any ideas on which credit card might work for me?

JuicyJesus

MBNA-issued cards like Virgin Money allow you to do a balance transfer to a bank account. You could then use the funds in the account to repay the loan.

You'll get charged a fee though of around 3%, which might eat into the savings you make a bit.

thescouselander

Yes, I suppose the alternative is to wait, save up a bit more and just pay the whole lot off in one go.

YorkshireBoy

The bulk of these cards will pay cash into your current account at 0% interest...

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

All have fees though, but at 4% for up to 22 months 0% you should save some money.

However, if you can settle within 15 months the M&S card (using Sterling TCs) may be the best option.

If you need longer than 2 years then credit cards may not be the best way, since if you can't shift any remaining debt at the end of the 0% intro period you'll revert to circa 17% APR...far higher than your 7.5% APR loan interest.

psychic_teabag

Are there penalties for paying off the car loan early ? You'd need to factor those into the sums.

Presumably you would have been better off paying off the car faster rather than bothering with the regular saver. But bit late to worry about that now.

A slower approach might be to use a 0% purchase card for all your ongoing purchases, and use the money you would have paid off the credit card to pay off the car loan instead. Then once that's cleared, you can redirect your efforts to pay off the accrued credit-card balance. You would of course forfeit any other ccard perks such as cashback. (Need to weigh pros and cons of 0% purchase now vs cashback paid in the future.)

thescouselander

psychic_teabag wrote: »

Are there penalties for paying off the car loan early ? You'd need to factor those into the sums.

Presumably you would have been better off paying off the car faster rather than bothering with the regular saver. But bit late to worry about that now.

A slower approach might be to use a 0% purchase card for all your ongoing purchases, and use the money you would have paid off the credit card to pay off the car loan instead. Then once that's cleared, you can redirect your efforts to pay off the accrued credit-card balance. You would of course forfeit any other ccard perks such as cashback. (Need to weigh pros and cons of 0% purchase now vs cashback paid in the future.)

I cant repay the loan faster in itself as far as I know. Its either stick with the repayments or pay the whole lot off at once. I dont think there was any disadvantage in doing the regular saver as the interest rate was very good.

My main aim really is to increase my cash flow pending the arrival of our first child. I reckon I could have the remaining balance paid off within about 3-4 months which does indicate I might be better off waiting and not using a credit card at all but I just wanted to check all the options.