Money Transfer on Credit Card Vs Short Term Loan

FeistyFidget

So I am in the middle of purchasing a shop, calculations add up and money is definitely available. Downside is that £2k of my own money (that I need to use to buy the business) is tied up in current pending business payments - they will clear, but possibly a month after the shop sale date.

So I have no choice but to look at alternative money options - granted I could max out both my personal and business overdrafts, but understandably I am not keen to do this.

I am now looking at either applying for a credit card that has a low cost money transfer or a personal loan. Downside to a personal loan is that my own bank will do a minimum 12 month loan and charge me £232 interest for the pleasure of doing so.

I thought I was on to a winner with the virgin credit card as the fees would work out at £86 for this, but I have just been declined :eek: I have no outstanding debts (apart from a mortgage that is always settled on time) and my credit rating from Experian is 600 with no flags or alerts, no idea why I was turned down :mad: ETA double checked my credit rating with Credit Expert (who virgin used to assess my credit) and I'm at a rating of 986 - Excellent ?!

Can anyone offer me some advice?

jonesMUFCforever

IMO The overdraft is your best option.

TheMoney

Credit score is irrelevant, don't take any notice of it. If you're sure the payments will clear, use the overdrafts. The charges you would incur would surely be less than taking a 12 month loan. Your best option really depends on how soon you can guarantee having the money available to pack back

worried48

I agree - use the overdrafts. I am in business myself and I know what a pain it is waiting for things to clear but that is what the overdraft is for after all. Obviously only use the overdrafts if you are absolutely sure the items will clear, don't rely on any payments that are still promises ie. have not actually been made.

FeistyFidget

Thanks everyone, in all likelihood I will go down the route of an over-draft. My only hesitancy is that I will be maxing them out and the business over-draft is routinely used for paying staff when clients are late settling their accounts. I don't want to max them out and then have no way of floating staff wages.

Will have a chat to personal bank (natwest) about early repayment charges for a 12 month loan as there may be a loop hole where I can over-pay to the point of only having a small amount left and then the early repayment interest is only charged on the small amount left

Will also speak to the business bank (santander) about extending the over-draft amount. My only concern is that I have an inkling that there may be a £100 fee connected to this

Once I have all the information I will just have to figure out the best course of action

CLAPTON

FeistyFidget wrote: »

Thanks everyone, in all likelihood I will go down the route of an over-draft. My only hesitancy is that I will be maxing them out and the business over-draft is routinely used for paying staff when clients are late settling their accounts. I don't want to max them out and then have no way of floating staff wages.

Will have a chat to personal bank (natwest) about early repayment charges for a 12 month loan as there may be a loop hole where I can over-pay to the point of only having a small amount left and then the early repayment interest is only charged on the small amount left

Will also speak to the business bank (santander) about extending the over-draft amount. My only concern is that I have an inkling that there may be a £100 fee connected to this

Once I have all the information I will just have to figure out the best course of action

ALL personal loans can be terminated early or can make overpayments with a modest fee.

NO personal loans commit you to paying interest for a year.


In your circumstances I would not max out the ODs as that leaves you no leeway if another problem arises

so CC or loan

FeistyFidget

Will be going down the loan option - will wait a week or so to re-assess finances and then decide if I really need 2k, or if I can go for 1 or 1.5k to hopefully bring the costs down.

Have spoken to the bank who explained that I can make overpayments equal to a monthly amount, but they've closed the loop hole about early repayment fees on the remaining amount - it is now charged at 52 days notice for the whole loan amount - will have a shop around and see what I can do.