Quick question: "Balance transfer" or "purchase"?

barbiedoll

Hi all

I've got a car on a finance agreement and I've realised that I can save a few hundred quid by paying it off via a 0% credit card.

I've got a settlement figure for the car loan and can pay it off online with a credit or debit card. Will this be classed as a "purchase" by the credit card supplier, or will it be a "balance transfer"?

The terms of the CC deal are a bit ambiguous, this is what they say about balance transfers...

‘Balance Transfer’ means a debit from your Account of an amount you owe another lender in the United Kingdom or a debit from your Account to a personal account held by you with another financial institution in the United Kingdom.

And this is their take on purchases....

‘Purchase’ means a purchase of goods or services using the Card or Card number or where the amount of the purchase is debited directly to the Account, for example, payment protection insurance premiums.

I'm pretty sure that paying off the car loan will mean a balance transfer fee. Could I (for example), get someone else to pay the car loan from their debit card, and I could then transfer the money from my credit card to their bank account and avoid the balance transfer fee? Is there another way?

[Deleted User]

It certainly won't be a balance transfer.

It will either be a purchase or a cash advance.

Probably cash, in which case, avoid it, unless your cash rate is less than the loan rate.

barbiedoll

Deleted_User wrote: »

It certainly won't be a balance transfer.

It will either be a purchase or a cash advance.

Probably cash, in which case, avoid it, unless your cash rate is less than the loan rate.

Would it really be classed as "cash"? I'll avoid that then, the cash rate is definitely not 0%.

How can I pay it off by using a 0% card? There must be a way round it, someone was bragging in the weekly email about paying off two car loans using these cards. I'm obviously missing something?

[Deleted User]

Whst you're missing is the fact that you're not the person in the weekly email.

It depends on your card and the loan provider. Check with both.

Anthorn

barbiedoll wrote: »

Hi all

I've got a car on a finance agreement and I've realised that I can save a few hundred quid by paying it off via a 0% credit card.

I've got a settlement figure for the car loan and can pay it off online with a credit or debit card. Will this be classed as a "purchase" by the credit card supplier, or will it be a "balance transfer"?

The terms of the CC deal are a bit ambiguous, this is what they say about balance transfers...



And this is their take on purchases....



I'm pretty sure that paying off the car loan will mean a balance transfer fee. Could I (for example), get someone else to pay the car loan from their debit card, and I could then transfer the money from my credit card to their bank account and avoid the balance transfer fee? Is there another way?

If you use the credit card to pay off the loan it will almost certainly be classed as a cash advance.

When doing a balance transfer you tell the 0% card lender your loan account number and they pay it directly to the lender you are paying off. That may not be allowed by the BT lender or the loan company or both.

The other way to do it is to get a Money Transfer card, transfer money into your bank account and pay off the loan with your debit card. This is the most usual method of moving a loan to a credit card.
http://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs

chattychappy

Also agree it cannot be a balance transfer.

Personally I think it would go through as a purchase. It's not a cash advance or a cash-like transaction (which to me means purchasing forex, travellers cheques etc). So it would only be "classed" as a cash transaction if it falls into one of the traditional exceptions that the CCs have introduced - principally gambling.

Isn't the case that when people pay off catalogue debts with a CC it goes through as a purchase?

Chrysalis

It very likely would be a purchase, as its just like any other retail transaction.

I have used my credit card to pay off hitachi loans and every time has been a purchase.

If you unsure, do a partial payment first, wait for it to appear on statement, if all looks good then pay the rest.

Chrysalis

chattychappy wrote: »

Also agree it cannot be a balance transfer.

Personally I think it would go through as a purchase. It's not a cash advance or a cash-like transaction (which to me means purchasing forex, travellers cheques etc). So it would only be "classed" as a cash transaction if it falls into one of the traditional exceptions that the CCs have introduced - principally gambling.

Isn't the case that when people pay off catalogue debts with a CC it goes through as a purchase?

Yeah they count as purchases I can personally confirm.

Anthorn

chattychappy wrote: »

Also agree it cannot be a balance transfer.

Personally I think it would go through as a purchase. It's not a cash advance or a cash-like transaction (which to me means purchasing forex, travellers cheques etc). So it would only be "classed" as a cash transaction if it falls into one of the traditional exceptions that the CCs have introduced - principally gambling.

Isn't the case that when people pay off catalogue debts with a CC it goes through as a purchase?

You think but you don't know? Well, the OP can take a chance and try it but perhaps they should look for the term "Regular Purchases" or equivalent in the terms and conditions and if it's there ask the bank or other card issuer to define it.

MSE recommends a Money Transfer card to move loans including overdrafts to a credit card and a Money Transfer card is what I recommended in my previous post and that is in fact what I have done in the past. Here's that link again:
http://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs?_ga=2.180707876.260234471.1498546362-760144015.1495008142

A catalogue account is a "regular purchase" and not a loan.

barbiedoll

Thanks to all who replied. I'm potentially going to save a few hundred quid so I don't want to get it wrong.

Looks like a money transfer card is the way to go.....

chattychappy

Anthorn wrote: »

You think but you don't know?

Yes, as I stated.

Anthorn wrote: »

If you use the credit card to pay off the loan it will almost certainly be classed as a cash advance.

So it seems you're not sure either!

Chrysalis wrote: »

Yeah they count as purchases I can personally confirm.

And now we have somebody who has direct experience.

Anthorn wrote: »

A catalogue account is a "regular purchase" and not a loan.

No. Catalogues typically offer credit governed by the 1974 act so you can run a balance. When paying off the balance, you are not making a purchase - the purchase has long since been made.

Anyway, looking at Barclaycard's T+Cs: (chose them at random)

Standard balance – This is made up of
the following, unless promotional terms
apply instead:
• Purchases
• Balance transfers
• Other amounts
And:
• Interest and account usage fees on the
above, and default fees

Cash balance – This is made up of
the following:
• Cash withdrawals (this includes any
fees other people or organisations
may charge for the withdrawal)
• Buying currency or traveller’s cheques
• Cash-like transactions, including:
• sending money orders or wire transfers
• Gaming transactions, including:
• gambling
• betting
• transactions relating to gaming
such as buying lottery tickets or
gaming chips, or spending on a
gambling website or at a gambling
establishment
• Interest and account usage fees on all
of the above

Emphasis added. This would be processed as a purchase by Barclaycard. Everything is a purchase unless it falls into one of the listed exceptions.

The OP can check the detailed T+Cs for her card to see if it says anything more. Or ask both the CC and her current provider how it will be processed. The advantages of getting a purchase card are: 1) no fee, 2) potential for airmiles/Tesco vouchers/cash back etc.