Transferrring a loan to a 0% credit card

roseann21

I have a car loan for which the settlement total is £3,530, it is at an interest rate of 11.24% and if I were to pay it off now instead of keeping it to the end of the loan period, it would save me around £400 . I have a credit card with around £1,600 outstanding. My credit limit on that card is £4,750. My plan is as follows: to request an increase of my credit card limit to £5,250, then pay off the car loan with that card. I would then take out a new credit card at 0% interest and transfer the total of £5,130 to that card. There would be a transfer fee of about £80 if I got a low transfer fee card (1.5%) and my aim would be to pay off £200 a month until the 0% deal ran out and then transfer again. I have transferred from one 0% deal card to another several times without any problem. Can anyone see any hidden issues or charges with doing this? E.g. would I need to pay the loan then immediately transfer the balance to avoid any charge from my current credit card - there is 17.95% on purchases - how quickly would they charge this interest? Any help or guidance very welcome.

YorkshireBoy

There may be a fundamental flaw in your plan...will the loan provider accept payment by credit card? Many (most/all?) won't.


You may need to go down the super balance transfer route with an MBNA (others are available) card.

roseann21

I can't see anything in the small print, I will ring the finance company to check. I will also look into the super balance transfer thing (never heard of that one!)

Pugsley_03

I thought MBNA had stopped the super balance transfer method??

Aquamania

What's a super balance transfer?

Is that a money transfer to a current account? (and obviously once in your current account you can then spend it on what you want?)

If so, interestingly Barclaycard sent me a letter this morning inviting me to do this. Only available til end January 2014.
1.9% fee applies and 0% until 1st July 2014. 11.4% thereafter (or if you break the terms like not pay at least the monthly minimum on time or exceed your credit limit), but obviously you would look to do a simple BT with another card provider then if not fully paid off.

Maybe by invitation only as the letter includes a "Secure Transfer Code", but worth enquiring about if you are interested

Aquamania

Pugsley_03 wrote: »

I thought MBNA had stopped the super balance transfer method??

I'm sure MBNA have offered me money transfers recently (and in the past I have used their cheques)

gavman99 appears to have been offered a Money Transfer by MBNA only yesterday
https://forums.moneysavingexpert.com/discussion/4862899
4% fee though - Ouch!

Tixy

Pugsley_03 wrote: »

I thought MBNA had stopped the super balance transfer method??

No, they are still offered on new accounts and fairly frequently offered to most existing account holders.

Aquamania wrote: »

gavman99 appears to have been offered a Money Transfer by MBNA only yesterday
https://forums.moneysavingexpert.com/discussion/4862899
4% fee though - Ouch!

Over 15months a 4% BT fee is equivalent to 6% APR, so its not a bad rate overall compared to the 11.24% that the OP is currently paying.

As you say BC do sometimes offer better rates to existing customers but these tend to just be occasional offers to certain customers. Your offer from BC is equivalent to around 4.3% APR.

msallen

Tixy wrote: »

Over 15months a 4% BT fee is equivalent to 6% APR ...

Nearer 3.2%

Tixy

msallen wrote: »

Nearer 3.2%

I think you've just taken 4% and divided by 15 and multiplied by 12?

That isn't how BT fees work. You pay the fee upfront on the whole of the starting balance.

So £1000 balance transfered would be £40 fee.

Repay £1000 over 15months at 6% APR is interest of £40.47

The 6% assumes that the debt will be paid off in equal payments over the 0% period.

msallen

Yes indeed - if you pay the whole balance its about 6%. However if you only make minimum payments you'll have paid about 3.2% on what is still outstanding after 15 months

On rereading the OP it seems roseann plans to pay nearly all the balance off (£200pm) so I agree it'll be far nearer your figure.