Is it a good idea to negate loan interest using a 0% Credit Card.

lazer-zxr

Is it a good idea to negate loan interest using a 0% Credit Card.

I'm not talking about balance transfer, more the following:

Get CC with 0% on purchases. Use to fund living expenses for a few months.
Put all cash from living expenses towards loan overpayment (where it is permitted), saving the interest.

Likely to be around £3k x 4.4% APR for 3 yrs, saving around £350 on interest.

Of course, there will be a plan to clear the 0% card by the time the 0% time is up.

Am I missing something here, or is this an effective way to save on interest?

I now trust my control, and ability to manage this kind of transaction. I'd even get a £20 M&S shopping voucher as an intro bonus ..... though I havn't checked out alternative bonuses on other cards.

rockm87

I personally wouldnt risk paying off debt with debt..there is no 'quick-fix and you cant really cheat the system.

andyfromotley

Hi Lazer,

technically it will be possible to make a saving using this method, however the savings are likely to be small especially when compared to the risk of putting your debt onto a CC. It may be 0% now but your circumstances may change, the financial situation may change (such as in 2008) making the ability to refinance on 0% very difficult. you are in effect taking a low fixed rate product that requires little thought or discipline to pay off and turning it into a floating product with an high interest rate and designed to take up to 41 Years to pay off!!

So yes on the upside you could probably do it and save a couple of hundred quid. On the downside it could go wrong for you and cast you many thousands of pounds in interest down the line and take decades to pay off. Not worth it for me.

blisteringblue

If the figures in your sig are correct you are already quite heavily exposed to credit? Are you sure you are going to get a decent balance on the card anyway to make it worth your while?

lazer-zxr

Thanks for the replies everyone, I think I'll avoid this as a way to save a bit of money.

Blisteringblue .... I'm not sure I'd get the credit, but I recently openned an IHG credit card, just to get some bonus points, and they gave me a £9k credit limit. I bought a tank of fuel on it, collected the points, and then paid it off and closed it

Thanks