0% credit card question

PedroMatias

A friend wants to pay for a car on a 0% card they've taken out, but the dealer doesn't take credit cards. They've asked if they could use the card to pay for a holiday I'm due to pay the balance on in return for the cash, with the net result that they'll effectively have the balance on the card.

My instinct says to avoid, but I can't think why! Is there any risk from my perspective? Could I end up being stung somehow? 

prettyandfluffy

Can they use the card to get a cash advance into their bank account?

PedroMatias

I presume the 0% rate wouldn't apply to cash advances... isn't that normally the case? I'm not very knowledgeable about credit cards! 

Jami74

PedroMatias said:
A friend

They've asked if they could use the card to pay for a holiday I'm due to pay the balance on in return for the cash, with the net result that they'll effectively have the balance on the card.

If anything changes with the holiday, and you end up being owed a refund. How would that work?

Nah, don't do it.

PedroMatias

Jami74 said:

PedroMatias said:

They've asked if they could use the card to pay for a holiday I'm due to pay the balance on in return for the cash, with the net result that they'll effectively have the balance on the card.

If anything changes with the holiday, and you end up being owed a refund. How would that work?

That's a fair point - I suppose their balance would get refunded, but I doubt they'd have the cash to pay us back

CliveOfIndia

As far as it goes then there's no problem as such - if anything, it's your friend who's taking the risk, if he pays for your holiday and you don't give him the cash.

But it's a very important point made by Jami74 - if anything goes wrong with your holiday, if there's an issue that means you're due a refund or whatever, it could get very messy.  And of course, you wouldn't be covered by S75 as you would be if you'd paid for it on your own credit card (although, as is always stressed, S75 is absolutely no substitute for proper holiday insurance).

Your friend could look at a money-transfer credit card - assuming he is able to get accepted for one with a high enough limit.  There's usually a fee to factor in, but it's one possibility.  As always, if he did go down this route it's important to make sure that he has the funds available to clear the card when the promotional rate expires.

However he ends up paying for the car, it's worth paying a small amount by credit card to benefit from S75 protection (assuming the car is between £100 and £30,000).  Most dealers will refuse a credit card for the full amount due to the fees they have to pay, but most will accept a small deposit. It doesn't matter how much is paid by card - even if you pay 1p on card and the rest in cash, you'll be covered by S75.  Yes, S75 isn't a magic panacea to cover all eventualities, but it's a useful bit of extra protection, so you may as well make use of it if you can.