Smallish loan required - loan or credit card?

unexploded

Morning all,

We've just bought our first house and we're looking at putting central heating in. Someone I know is a gas safe plumber and will do it for around the £3000 mark. However being self employed, small operation, he doesn't take credit card.

I usually only buy what I can afford with the money I have, but I think this case is a bit different! So, I was looking at a loan, however the interest rates go up quite a bit if you're after an amount under £7500. My bank Nationwide would do me £3000 on a 10.7% APR loan.

The alternative would be a long term 0% credit card. I've had a few from the likes of Tesco and Nationwide, and they're all paid off and not in use. However, how do I pay someone who doesn't take credit card, with a credit card? I did think of Paypal - I believe you can pay someone's Paypal account with a credit card. Would that be considered a cash withdrawal though? I understand taking cash from a credit card is a bad idea...

So I was wondering if anyone else has been in a similar situation or someone could offer a little advice. Thanks very much

Ebe_Scrooge

One way around it would be one of the so-called "super balance transfer" cards. These "transfer" a balance into your bank account ( e.g. £1000 is placed in your bank account, and you then owe £1000 on the credit card - plus the usual balance transfer fee ). If you look on the credit card section of the main MSE site you'll see which cards offer these.


The only potential problems are (a) will you be accepted, and (b) will they give you a high enough credit limit for what you need ?


Do remember - like any credit card, you absolutely MUST pay at least the minimum each month, it's worth setting up a direct debit to ensure you never miss a payment.

unexploded

Hi Ebe Scrooge, thanks for your reply. That's a great idea!

As far as I'm aware my credit rating must be at least okay, as I've never been refused, never late paid etc. That said, I have only had the mortgage for a month so I'm going to have a look at my credit file now.

I have a credit card with £6000 limit (£0 balance, never use it) so I'm hoping that's proof that I can be trusted with such levels of credit!

AFK_Matrix

I got a super balance transfer card when I need a new boiler and it worked fine.

If your checking your credit file then just pay the £2 fee to each of the agencies (noodle is free though) don't sign up to them and then go over your file and check all is in order.

You might want to lower the £6000 limit on your credit card though and try and wait for this to show on your credit file as they will take into account the total limits of your CC's not the amount you are using. I have closed one CC in preparation for me getting another super balance transfer just in case.

unexploded

Hi AFK_Matrix, thanks. Great to hear that's worked for you too. This could be the way to go.

Interesting about closing the cc, I've read mixed opinions about this (whether it is good or bad to have an unused credit card closed or not). I've had this cc since 2010 and have had no problem with finance applications or this mortgage. Grateful for the advice!

AFK_Matrix

You may well have no problems it was just a thought. Don't close the card though all I meant was to ask to have the limit lowered. I closed one CC as I wasn't using it but I have another with a 4k limit on and will probably ask to have this reduced to 2k nearer the time of applying. It may do nothing but it can't hurt imo.