cash transfer from credit card to pay loan

tiger135

barclay card is offering me 3.5% cash transfer until july 2025 .is it worth transferring say 5k (credit limit 6.5k) to pay a chunk off a loan i have which charges over 6%??

BoGoF

Is 3.5% the fee and it's 0% or no fee and 3.5% interest?

What would your plans be to clear the card in July 25? When does the loan finish?

Nasqueron

3.5% fee i.e. £175 for £5000 for a 0% 16 month deal? If you can make the payments on the loan and keep paying the minimum on the card and have a plan to clear it, you may well save money yes - assuming the loan allows overpayments

tiger135

yes loan allows overpayments. its a one off fee and then 16 months at zero per cen in which time.i should pay it off.

CliveOfIndia

tiger135 said:

yes loan allows overpayments. its a one off fee and then 16 months at zero per cen in which time.i should pay it off.

In terms of saving money in interest payments then yes, it's a sound plan.

Just one note of caution - make absolutely sure you clear the card debt before the 0% deal expires.  Otherwise it'll start accruing interest at the card's standard APR, which will be rather more than 6%.  You may be able to transfer any remaining balance to another card - but if you find that you're not eligible for another card then you're somewhat snookered.

retiredbanker1

One more note of caution - what happens to the loan after the overpayment? Will the repayment stay the same and the remaining loan is cleared quicker or will the repayment reduce to take account of the lump sum?

Do you get the choice or is it up to the lender?

If the first option remember you will have a loan repayment and at least the minimum to pay on the card.

tiger135

IIRC the payment stays the same but the 5 year term reduces 

MrFrugalFever

Term reducing would be the better option if this is an option.

One further note of caution, if Barclaycard decide to suddenly reduce their CC limit or demand payment in full at any time have you got a backup plan to account for this. They are notorious for significant slashes in CC limits even without any real reason known to the individual for doing so - there's a whole thread on here about it, admittingly amidst the start of the pandemic but still its not unheard of at least.

Ganga

tiger135 said:

IIRC the payment stays the same but the 5 year term reduces 

Where does the 5 year term come from ? i thought you said it was for 16 months

northwalesd

Ganga said:

tiger135 said:

IIRC the payment stays the same but the 5 year term reduces 

Where does the 5 year term come from ? i thought you said it was for 16 months

That's the term for the original loan, not the credit card.

molerat

MrFrugalFever said:

One further note of caution, if Barclaycard decide to suddenly reduce their CC limit or demand payment in full at any time have you got a backup plan to account for this. They are notorious for significant slashes in CC limits even without any real reason known to the individual for doing so - there's a whole thread on here about it, admittingly amidst the start of the pandemic but still its not unheard of at least.

A bit of scaremongering there.  Immediate repayment can only be required in exceptional circumstances, they can not just decide to do it on a whim.  Reducing the limit below the outstanding balance would also be considered improper and the FOS would most certainly rule against them.