moving a loan onto a credit card

worto03

Hi,

We have been working on reducing a 24k debt & in the last 18 months have got it down to 9.5k (8.5k without the interest)

Now all of this money is currently on a HSBC loan at 6.9% & I wanted to move it to a credit card (probably the M&S one for not BT fee & 4.9% on the life of the balance)

We currently pay £430 a month off this loan and the penalty to payoff early is 2 months interest but the credit card would allow us to overpay now that the other debts are all out of the way. In interest alone we would probably knock off a decent ammount and the flexibilty of being able to overpay means we should be able to knock a few months off the expected debt-free date.

Now - finally getting to the main question - I've been told that I can't BT it because it has to be on a store card or Credit card, I have an old credit card with nothing on it and a 15k limit so can I pay off the loan with this card then quickly BT it to the new card at 4.9% & is this likely to get messy if they take too long to do the transfers?

Just checking I havn't missed something obvious before I start moving big lumps of money around.

Thanks,
Steve.

CLAPTON

just a few things...
you may well not get a suitable limit for M&S card.

when you say 'pay off' the loan with the existing CC do you mean you will take cash from the card and pay off the loan and and then BT to the M&S card?

In this case there is usually a cash advance fee of 2-3% and of course you will pay interest from the day you withdraw the cash until the BT becomes effective.

Depending upon how much you can afford to allocate to the debt, it may be better to simply continue paying the loan and saving any spare until you have enough saved to pay the debt off.

worto03

may be better to simply continue paying the loan and saving any spare until you have enough saved to pay the debt off.

Thanks,

That might be a better idea I think. It seems I may be trying to overcomplicate things.

worto.

oscar52

You can use a CC to pay off a loan, however it means you have to transfer the money from the card to a bank account and then on to a loan. As far as I am aware (and this was certainly true couple of months ago) only Egg and MBNA (virgin Abbey A&L) allow transfers to current accounts. I am not sure of any cards that allow transfer direct to a loand account.

bandraoi

Am I right in reading it as you can overpay without penalty?

So just overpay up to a small bit left, then the two month interest penalty will be tiny.

If you could move it to 0% it might make sense, but you'd only be moving it to save 2% interest, one months interest on a credit card or a bt fee would wipe that out.

worto03

Am I right in reading it as you can overpay without penalty?

no I can't overpay at all at the mo - thats one of the reasons why I wanted to move it to a CC to be more flexible. I have a spare savings account which has had 20odd quid in for a couple of years so I think I'll put some money aside into there every month until I have enough to pay it off early.

Thanks all,
worto.

cathybird

you might also want to read this, martin's advice about moving a loan to a credit card:
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1094822880,81886,