Credit card query

spanishtechno

I need to spend a substantial amount of money on an item at short notice and I don't have enough cash or savings to pay for it. Unfortunately I don't have a credit card either and don't have time to apply for one in the meantime.

The store I'm buying the item from offers interest free credit for 12months. However I'd like to pay it back over a longer period. Could I take out credit with the store, then take out a credit card with a low interest rate (like Barclaycard simplicity) and each month make payments from that to pay off the part of the store debt I can't afford? Would there be any kind of penalty for doing this?

Apologies if this is a daft question but I've managed to get through life so far without ever having to borrow a significant amount of money so I know nothing about this sort of thing!

CLAPTON

If you dont have a CC or other credit already, then its unlikely you will get a good credit card (i.e. one with a decent credit limit and low interest rate).

This is because you wont have a 'credit history' so you will be rated as high risk and so will probably only get a low credit limit and a high APR.

Whether its possible to make your monthly store payments in whole or part by CC is a matter you need to check with the store. In many places that wouldn't be possible.

However, you could use the CC for 'normal' monthly spending (food, petrol etc) and so free up extra money to make the store monthly payments.

It is very high risk to commit to the store payments however, unless your are sure you can keep them up.

Also bear in mind that a CC requires the minimum monthly payments ..usually between 2-5%

Pilt

What is the 12 month deal?
Pay nothing for 12 months then settle the account (or if you then do not have the money you have to paying monthy at a high rate of interest -29.9%- charged since the loan was taken out)
OR pay over 12 months, total price same as if you paid cash?

If its the first, then you have 12 months to put monthly payments into a savings account (maybe a regualr monthly saver account)

then when payment becomes due then you can pay part with savings and part from whatever other method (loan/credit card) then pay that debt off over time.

If its the second, then I imagine its a condition of the loan that its paid by direct debit. As clapton says you could pay the store loan from your available money and then live on a credit card, building up a debt which will (depending on card and how much you pay) charge interest.

spanishtechno

Clapton, Pilt, thanks for the replies.

Clapton - I do have a mortgage (which negates my earlier statement about not having had to borrow a significant amount of money but I view that as a somehow different sort of debt ) and I've had a moderate overdraft (now paid off). Wouldn't these give me a good enough credit rating for a decent card?

Pilt - I'm fairly sure the deal is pretty sure the deal is total price over 12 monthly though I'll have to double check. I hadn't thought to consider the need to set up a direct debit.

The use of a cc for monthly spending that would normally come from the current account is an interesting one, that idea hadn't occurred to me but seems a useful option if I can get the right card.

Anyway, thanks again both for your help.

Thomas_Crown

Pilt wrote: »

If its the first, then you have 12 months to put monthly payments into a savings account (maybe a regualr monthly saver account)

then when payment becomes due then you can pay part with savings and part from whatever other method (loan/credit card) then pay that debt off over time.

It is essential to read the T&Cs carefully when taking up one of the 6 month interest free credit offers. Not all companies will let you settle your account using a credit card at the end of 6 months.

Several years ago I bought an electric fire for £250 from Comet & took up their offer of 6 months interest free credit. When I phoned the call centre after 5 months they would not let me pay by credit card & I had to send them a cheque for the full amount. At the time I struggled to find the £250 as I was not expecting the refusal of payment by credit card. The only other alternative was to pay by monthly direct debit at an extortionate rate of interest.

puddings_2

If you are offered 12 months interest free 0%APR credit and you are confident that you will be able to pay it off in 12 months then do it.

Like the previous posters said, be aware that after 12 months, if you don't pay it off by cheque/debit card, then they will probably extend the loan and sting you with a whopping interest rate such as 29%.

jonnyb

Dear Mr Brand, kindly remove your link from your signature. There are rules on this board you know.
I am assuming you know this and have just ignored them, so will report your post.
I am turning into Victor Meldrew:eek:.

Are you really Mark Mccoll ?