Best way to convert £10K card balance to cash?

FoundationAndMore

What do you think is the best way to convert credit card limit to cash? The limit is £10,000. A money-transfer facility (offer) was in place but they've pulled it so I'm now thinking about buying a £10K item and selling it for cash. Others must have done this in the past so I'm wondering what the best way might be?

All suggestions are appreciated. 

FoundationAndMore

Sorry, best way to convert £10K LIMIT to cash? Sorry

TheMilkmansDad

From the information provided, my suggestion would be not to do it.

Why the sudden need for £10,000 cash? There's cheaper ways (loans etc) available should it really be needed.

y3sitsm3

I don't know what the "best" method is but I feel confident in saying buying an item and reselling it for cash is a pretty terrible way of doing it.  You'll probably take a significant hit on the value of the goods that you purchase.

FoundationAndMore

Unfortunately, I recently borrowed heavily on one card. This prompted every card lender of mine to pull their 'money transfer' offers which had been available to me for the last 4 years, and I had naively been relying on. 

A loan is not available due to level of borrowing on cards. My only option is to utilise the credit facility on a card. 

Exodi

FoundationAndMore said:

Unfortunately, I recently borrowed heavily on one card. This prompted every card lender of mine to pull their 'money transfer' offers which had been available to me for the last 4 years, and I had naively been relying on. 

A loan is not available due to level of borrowing on cards. My only option is to utilise the credit facility on a card. 

So if I'm understanding you correctly - you have a credit card with a lot of debt on and your intention is to use another credit card to buy an item, sell it, then use the proceeds to pay off the debt on the first credit card?

Would it not be better to instead close down any unused credit facilities, and apply for a loan in the near future (if you absolutely have to)? If you have lots of open credit streams available to you, I can understand why I lender may be against offering a loan.

Also, if you're willing to borrow a larger amount (as you need to factor in the fact that you will almost inevitably resell the item you purchase for less than you're buying it for), you're probably not even saving money despite a presumably lower interest rate.

The whole thing is backwards and sounds like a slippery slope...

molerat

So you want to borrow cash at maybe 20% + APR ?

FoundationAndMore

molerat said:

So you want to borrow cash at maybe 20% + APR ?

Yup. That would be the plan. 

Ebe_Scrooge

FoundationAndMore said:

Unfortunately, I recently borrowed heavily on one card. This prompted every card lender of mine to pull their 'money transfer' offers which had been available to me for the last 4 years, and I had naively been relying on.

So your plan is to buy a 10K item on card A, sell it, use the proceeds to pay off the debt on card B?  Which then still leaves you having to pay off the 10K that's now sitting on card A, plus the £1000 left on card B because whatever you bought for 10K you won't sell for 10K.

This has got to be the daftest plan ever.

Money transfer / 0% balance transfer cards have become harder to get anyway in the last year or so, due to lenders reducing their risk exposure since Covid hit.  So it's not just you - though it sounds like your history won't have helped matters.

I think the nub of your problem stems from your reliance on money transfers.  That is simply not a sustainable way of doing things.  You need to take a step back and come up with another approach which focuses on actually repaying the debt rather than just shifting it from place to place.  The debt-free wannabe board on this forum is an excellent starting point.

Unless ......

FoundationAndMore said:

Unfortunately, I recently borrowed heavily on one card.

Can you sell whatever it was you bought, that might give you a decent chunk towards repaying the debt, rather than a convoluted attempt to buy then sell something else ?

FoundationAndMore

Ebe_Scrooge said:

FoundationAndMore said:

Unfortunately, I recently borrowed heavily on one card. This prompted every card lender of mine to pull their 'money transfer' offers which had been available to me for the last 4 years, and I had naively been relying on.

So your plan is to buy a 10K item on card A, sell it, use the proceeds to pay off the debt on card B?  Which then still leaves you having to pay off the 10K that's now sitting on card A, plus the £1000 left on card B because whatever you bought for 10K you won't sell for 10K.

This has got to be the daftest plan ever.

Money transfer / 0% balance transfer cards have become harder to get anyway in the last year or so, due to lenders reducing their risk exposure since Covid hit.  So it's not just you - though it sounds like your history won't have helped matters.

I think the nub of your problem stems from your reliance on money transfers.  That is simply not a sustainable way of doing things.  You need to take a step back and come up with another approach which focuses on actually repaying the debt rather than just shifting it from place to place.  The debt-free wannabe board on this forum is an excellent starting point.

3 months interest = £500. If the loss of converting the £10K could be £500, then the total cost for borrowing £10K for 3 months would be around £1,000, which is acceptable for the project. 

The money would be utilised to finish a project not to spaff on champagne and caviar. 

cymruchris

FoundationAndMore said:

molerat said:

So you want to borrow cash at maybe 20% + APR ?

Yup. That would be the plan. 

And what might the plan be to settle the increased debt? 

So if you have a debt of £20k - and borrow this £10k - you’ll pau down the £20k to £10k and then have the nee £10k - so will be back to a debt of £20k. 

You’ll have also lost some of the capital by spending £10k and recouping say £8k. So your debt will actually go up to £22k. (Just representative figures)

Although you have a card with a £10k limit - you may find that if you go out and try and spend £9950 on it - that it gets declined - as it’s not your normal spending behaviour - it’ll be up to each card provider which transactions they do or don’t authorise. So that’s likely a possible flaw in your plan. 

You obviously need to raise cash to pay the existing debts which is  understandable - are there other options that could help? Have you done a full audit of your expenditure to see if you can cut anything back ? Downgrade entertainment packages ? Downgrade phone contracts ? Cancel Netflix and Spotify ? That kind of thing? Every penny can help go towards paying down the debt. 

Do you have stuff in the cupboard that you’ve never used ? Clothes? Shoes? Or old tech? Have you had an eBay clear out? You might not get what you paid for the stuff - but you would knock a dent in the debt. Less debt is better than stuff in the cupboards. 

Just a few thoughts there to think about - and hope you’ll be able to tackle the debt without buying and selling off your credit card.