0% money transfer

chelseablue

We will be buying a car in March, not buying brand new, will be around 4 years old

Will be paying approx. half in cash

My first thought was to get a personal loan for the remaining money (and pay off as quick as possible)

But my credit card provider (Barclaycard) offer 0% money transfers so am thinking would this be better than a loan that obviously charges interest?

Any pitfalls I need to be aware of?

[Deleted User]

It depends on the rate and fees.

A 4% fee on a money transfer that will be paid back within a year, would be considerably worse than a 6% loan paid over the same timescale.

Also of course, if you don't clear the card within the promo period and cannot BT, you could face a rate of around 20%.

Candyapple

Nope. I think with Barclaycard the money transfer offers are usually for 9 months? Just make sure whatever amount you borrow, divide it by however many months your deal is on for and that way when the offer ends, your balance will be clear.

Also worth pointing out that Barclaycard usually offer the same deal each month (check your offers in online banking), so that could save you taking it out now in October and wasting 4 months of the 0% period.

chelseablue

Deleted_User wrote: »

It depends on the rate and fees.

A 4% fee on a money transfer that will be paid back within a year, would be considerably worse than a 6% loan paid over the same timescale.

Also of course, if you don't clear the card within the promo period and cannot BT, you could face a rate of around 20%.

The fee is 1.9%


Currently we save £1,000 a month so would send £500 a month to Barclaycard to clear it before the deal ended. My credit rating is excellent so could BT if required.

Candyapple wrote: »

Nope. I think with Barclaycard the money transfer offers are usually for 9 months? Just make sure whatever amount you borrow, divide it by however many months your deal is on for and that way when the offer ends, your balance will be clear.

Also worth pointing out that Barclaycard usually offer the same deal each month (check your offers in online banking), so that could save you taking it out now in October and wasting 4 months of the 0% period.

Yes that's true, they always have money transfer offers on there. The current offer the 0% ends in July, so would apply in feb/march


So its not a totally bonkers idea if I pay it off before they start charging interest?

Candyapple

chelseablue wrote: »

So its not a totally bonkers idea if I pay it off before they start charging interest?

Nope definitely not a crazy idea.

There are 2 schools of thought for 0% deals. The first is that however much money you have borrowed, you have the same amount sitting in a high interest account for the entire term and just make sure you set up a DD for minimum monthly repayments. That way, a couple of weeks before the offer ends you clear the balance in total and owe nothing and have made some £££ in savings interest.

Second one is say you borrow £5k for a period of 9 months. You would pay off £555 per month to clear the balance so at the end of the 9 months the balance is clear.

chelseablue

Thank you, makes a lot of sense!