Buying car insurance on credit....

moneysavexpert1986

...I've just entered into an agreement with Norwich Union's credit company to pay my car insurance monthly for the next year. I'm thinking of paying it all off on a 0% interest credit car and setting up a Direct Debit to pay it off in order to get rid of the 37% interest. Is this possible? Does this count as a purchase of balance transfer?

Stephen_Leak

It is eminently possible and it would be a purchase.

However, in your case, as you have already taken out what is - in effect - a loan from NU, you need to check if you can pay them off early and, if so, whether or not they will raise a charge for the priviledge.

The only potential danger with using a 0% card in this way is, of course, if you go over the interest free period allowed, you will get hit with a shedload of interest. Just make sure you pay it off beforehand. Make a diary note, use Outlook or the "Tart Alert" on this website.

An even more lucrative variant on this is to set up the Direct Debit to just pay the minimum payment each month. Then "ring fence" the amount of the final payment in a high interest savings account. This way you actually earn a little bit of interest on it for the duration. Then, well before the 0% period runs out, transfer this out of the savings account into your current account and then pay off the credit card.