New to this, Need to borrow £1000. Credit card the answer?

Badger0068

Hi,
I've always told myself I wouldn't get a credit card/loan, however, the engine in my car has blown up and I need to fund a new one.
I have never looked into credit cards and there is so much information on different cards, its all a bit confusing.
Could anyone give me any advice on what I should be looking for?
Can I get a credit card and transfer £1000 straight from it, into my bank account, and then cut up the card (so I don't spend anymore) and start paying it off monthly?
Or would I be better off trying to get a loan?
What are the difference in interest rates between borrowing £1000 on a card compared to a loan?
Any ideas how much I would be expected to pay back monthly and for how long?
I am hoping to keep the monthly repayments as low as possible due to only working part time and most of my income goes on rent/bills.
Thanks for any advice,
Tim

rabbit_burrow

Assuming you are able to get a card with a credit limit of at least £1200, withdrawing cash will cost you around 3% for the advance fee and the interest charge will be whatever the card says it is.

If you have a 19.9% APR, then you'll be looking at about £17pcm in interest if you only make the minimum payment, so the first month will see you paying approximately £47 in fees, so your payment would need to cover that plus you will want to reduce the balance as much as possible. The minimum payment will be whatever the card company says it is.

If your APR is around 39.9, then you would be looking at fees of at least £64 for the first month.

If you couldn't pay it off within a couple of months, then I wouldn't recommend it. Then again, I wouldn't recommend taking cash from a credit card full stop.

grumbler

Badger0068 wrote: »

Hi,
I've always told myself I wouldn't get a credit card/loan, however, the engine in my car has blown up and I need to fund a new one.
I have never looked into credit cards and there is so much information on different cards, its all a bit confusing.
Could anyone give me any advice on what I should be looking for?

It's worth looking for a card with 0% introductory offer, but with a limited credit history you might find it difficult to get one.

Can I get a credit card and transfer £1000 straight from it, into my bank account, and then cut up the card (so I don't spend anymore) and start paying it off monthly?

Some cards allow this, but it's not free and the interest rate on such transaction will normally be the same as on cash advances and higher than on purchases. Anyway, you can just withdraw cash from any card, but the limit on cash advances (and money transfers to a bank account) is smaller than the total limit.

For cards with 0% offers see: Super transfers, but it makes sense just to pay by a card with 0% on Purchases

Or would I be better off trying to get a loan?
What are the difference in interest rates between borrowing £1000 on a card compared to a loan?

See MSE articles:

• Spending 0% Cards
• Cheap Loans

Any ideas how much I would be expected to pay back monthly and for how long?
I am hoping to keep the monthly repayments as low as possible due to only working part time and most of my income goes on rent/bills.

The total cost of credit can be very high in this case:

• Minimum Repayments Don't get locked into debt, use credit card calculator

northerner999

If you need to spend £1,000 on a car, the cheapest way to pay for it on borrowed money would be a credit card with 0% purchases and pay for it on the card, pay off the minimum (at least) each month and make sure the full amount is paid off by the time the 0% deal runs out.

Only take cash out on a credit card as a last resort. If you really need to borrow money to have in your bank account, as opposed to just paying on a new card, then look for a personal loan and pay it back as soon as you are able to.

manami_mnm

If the car dealer doesn't accept credit cards, then try to get a lone from your bank or from the local credit union. It is always cheaper than a cash advance.