Loan vs credit card 21 June 2022 at 11:10AM in Loans 1 reply 146 views

engineer0101

Hi, I have a £3000 (remaining) loan at 7.9% which puts circa £20 per month back on in interest. I have a somewhat empty 0% credit card with a £7500 credit limit. 

Can I pay off a loan with a credit card? Theyre the same bank if that makes a difference. 

Is this a good idea assuming I can pay it back within the 0% period?

Are there any drawbacks? My logic is 1x large credit card is better than 1x small credit card and average 1x loan. 

Sandtree

What sort of 0% deal is it?

You cannot do a balance transfer to a loan, only another credit card and then most dont allow such transfers within the same banking group with a promotional rate. If its a money transfer offer then that does work and the same banking group is irrelevant.

Is it a good idea? Depends on the early redemption penalty on the loan, what the transfer fee is on the credit card, how quickly you can pay it off and how certain you are of paying it off within the 0% offer... clearly worst case is you pay a fee for the MT, an early redemption penalty and then at the end of the offer you have most the loan left outstanding but now at 22% interest.