Noobie Here, Q 0% purchase collecting Debt Using a Credit Card good idea?

Poshsalt

Hi

So there are really 2 questions.

1. My gf has a credit card where shes debit of £700 and been payign this off for 3 years, but they charging her £40-50 a month. So its never ending. I watched some tiktok videos and they said by getting a new credit card with 0% purchase and 0% transfer. She could put all her debts into that accounts then she wouldnt be charged for 20 months. Is that correct?

Or have I missed something.

2. I have very high credit score, never had a credit card. I have businesses and also starting new businesses. End of October I have lots of money coming so I need about £5k for about 3 months. I've read you can get a credit card and take out £10k if needed. It will hurt the credit score but only for a year. Question, when you start a credit card is there a limit? Would a credit card be good idea or better with business loan. I've looked into businsess loan they want 25% return.

Regards

MorningcoffeeIV

1. She'd need to make minimum payments but would be charged 0% interest in the debt.

However, if she's been making only minimum payments on a very small debt for 3 years, she is highly unlikely to qualify for a 0% offer. She would be better off cutting costs and increasing her payments.


2. You're talking about a money transfer card - you would need a good credit history to get one - it sounds like you may not have one, if you have little experience with credit. Your credit score isn't used in lending decisions. 

The_Unready

If you have 'lots' of money coming in from October can you lend her the o/s £700 or so then and get her to pay you back with nominal interest?

She could make the minimum payments for the 1 or 2 months until then, which might be easier for her than getting a 0% card.

CliveOfIndia

Poshsalt said:

1. My gf has a credit card where shes debit of £700 and been payign this off for 3 years, but they charging her £40-50 a month. So its never ending. I watched some tiktok videos and they said by getting a new credit card with 0% purchase and 0% transfer. She could put all her debts into that accounts then she wouldnt be charged for 20 months. Is that correct?

Or have I missed something.

There are 3 types of "special deals" on credit cards:

1.  0% purchase.  You use the card for buying stuff, and for a specific period of time (12 or 18 months, for example) you are charged interest at 0% rather than the card's standard rate.

2.  0% balance transfer.  This is where you currently have a debt on an interest-bearing card, you can transfer the debt to a new card that charges 0% - again, for a defined period of time.  So you save yourself having to pay interest on the original card, as it's now been paid off.

3.  Money-transfer card.  This deposits cash into your current account, which you can do with as you wish.  A corresponding debt is placed on the credit card, which usually charges interest at a fairly low (sometimes zero) rate.  Again, for a define period of time.

In all of these scenarios, you must continue to make at least the minimum repayment to the card every month.  And you must be able to pay off the debt in full when the promotional rate expires, otherwise you're back to square one paying interest at the card's standard rate.

Your chances of being accepted, and the credit limit you'll be offered, will be dependent upon your credit history and how the lender assesses you against their own individual criteria.  Your GF may find that she struggles to get accepted if she's already struggling to repay a relatively low debt, but there's no hard in running an eligibility check and see what the indications are.  Either a balance-transfer or a money-transfer card would be suitable for your GF's needs - a balance-transfer usually (not always) charges a lower transfer fee than a MT card. 

Poshsalt said:

2. I have very high credit score, never had a credit card. I have businesses and also starting new businesses. End of October I have lots of money coming so I need about £5k for about 3 months. I've read you can get a credit card and take out £10k if needed. It will hurt the credit score but only for a year. Question, when you start a credit card is there a limit? Would a credit card be good idea or better with business loan. I've looked into businsess loan they want 25% return.

For this you'd need a Money-Transfer card.  Your score is irrelevant, but with a limited credit history I'd hazard a guess that you're unlikely to be offered a credit limit of £10K.

It is possible to withdraw money against an ordinary interest-bearing card (subject to your existing credit limit).  But this is a very expensive way of doing things as you'll be charged a cash advance fee as well as being charged interest at a high rate.  And withdrawing cash is generally viewed negatively by lenders (I assume this is what you're referring to when you say it'll harm your score?  As previously mentioned, your score is meaningless, but cash withdrawals can negatively affect your credit history).

Poshsalt

The_Unready said:

If you have 'lots' of money coming in from October can you lend her the o/s £700 or so then and get her to pay you back with nominal interest?

She could make the minimum payments for the 1 or 2 months until then, which might be easier for her than getting a 0% card.

I want to laugh but it would be at myself, she already owes me £3,5k an i'll never see that back so I've stopped with any more loans from me.

Poshsalt

Thanks for your feedback.

For 2. for me what would you suggest, after abut £3-£5k only till Jan. But dont really want to pay any %, used to get fantastic loans from paypal but they stopped.