Paying off a loan with a 0% Credit Card

Badgio

Hi, I've had a 0% CC for over 2 years now and have managed to almost clear off the CC amount. Now the 0% term has finished, I'm contemplating paying off a personal loan with the card and moving the full amount to another 0% card but I'm worried that I wont be accepted and will be left with a high interest CC with a significant amount owing. I've looked at money transfer cards but they all seem to me for 12 months only.  Any helpful tips would be greatly appreciated. 

Ebe_Scrooge

The short answer is, you can't.

Most loans will not accept payment by CC.  But even if you can pay by card, it will be classed as a cash advance so you'll be hit with cash advance fees and interest.

Putting that aside, you're very wise to not assume that you'll be able to get another 0% card to transfer the balance to.  If you can't transfer to 0%, I'd be willing to bet that the interest rate on a credit card is far higher than on the existing personal loan.

Of course, you could apply for a 0% card first, and see what happens.  But that's a moot point, since you can't realistically use a CC to pay off a loan anyway (aside from the Money Transfer route, which you've already investigated).

OK, well I guess that's not strictly accurate.  You could do it, with the following caveats:

1.  Will your loan accept CC payments?

2.  If they will, then apply for the 0% BT card first.

3.  Assuming you're given a high enough limit, the use your existing card to pay the loan.

4.  Be aware that you'll almost certainly be hit with a cash advance fee from you card, and will be charged interest from day 1.

5.  Be aware, also, that there may be an early redemption penalty on the loan to factor in.

6.  Now transfer the balance to the 0% card - factoring in any BT fee that may be applied.

7.  Make absolutely sure you'll be able to pay of the BT card in full when the promotional rate expires.  Otherwise you'll start paying interest at their standard APR (likely far higher than you were paying on the loan), and with no guarantee that you'd be able to transfer any remaining balance to another card.

DullGreyGuy

1) Does your loan provider accept credit cards? Most dont and some that do only do so after you're in default

2) Will your existing credit card company consider it a purchase or a cash advance? Most will treat it as a cash like transaction and so charge you as if you'd taken the money out an ATM

Given you will BT the money to another card 2 may not be as important as if you were proposing getting a 0% purchase card to do this but you have to factor in the upfront charges (both for the cash advance and BT) and the interest between the balances moving.

Brie

Do things in a more logical fashion.  Apply for a credit card with a good 0% money transfer deal.  If/when accepted to a MT of the max amount into your bank account and pay off the loan from there.  

The alternative is to apply for a card with a good 0% balance transfer deal assuming your current card might offer a money transfer deal.  Problem with that though is that you will be hit with 2 transfer fees which may make the whole idea more expensive than it is worth.  

Have you checked the T&Cs on the loan to ensure you can pay it off early and cheaply?