Balance transfer for free credit

ericonabike

When talking about balance transfers, Martin always, relates it to having an existing debt at high rates. But why not use it to get free credit? Eg, a big purchase, say £5k - make it in e, listing card, then transfer to decent BT and have up to three years interest free credit, rather than using savings. Or am I missing something?

Newbie_John

It's a one advice for all.

It's bad to be in debt and this is a solution to that problem, what you suggest is fairly common but it results in debt and if you're not good with your money you may end up spending the savings while keeping debt - so you end up in debt :)

osmarks

It is worse than using a 0% purchases card because of the transfer fee.

GrumpyDil

Ideally you would aim for a purchase card but if you can't pay in one go than balance transfer would be better than leaving the debt to attract interest.

ericonabike

Purchase card - not thought of that. Thank you!

Brie

I've done exactly as you suggest - didn't have a 0% purchase card but had one with a very high credit limit and a 0% BT offer. Bought a car, paid for on a couple of credit cards (they had lower limits) and then BTd on to the 0% offer card to pay off the car over the next 2 years. Much cheaper than getting car finance of any sort.

vacheron

https://forums.moneysavingexpert.com/discussion/6665628/balance-transfer-for-free-credit

Nope, you're not missing anything. A 0% 36 month balance transfer card with a 3% fee is basically lending you money at a 1% APR, this can be a cheap loan, or alternatively, if you already had the money available for that purchase, use the card and put the money you were going to spend in an ISA 4.5%. Set up a direct debit to pay the minimum payment each month, and you've made yourself around 10% profit out of thin air when it comes to repayment time!

Purchase cards can be cheaper and simpler if you are making a purchase, but they are sometimes more stingy on both the credit limit and the length of the 0% offer, so sometimes paying a couple of percent to do it via a balance transfer card can be worth it.

The big negative (which is why martin probably doesn't pitch it like this on his TV shows) is that it does require financial discipline. And could get you into a lot of trouble should you not have any!

Nasqueron

https://forums.moneysavingexpert.com/discussion/comment/81976572#Comment_81976572

It's only bad to be in debt if you are paying interest (or for something people don't normally have the cash for e.g. a mortgage or sometimes a car). Having debt on 0% for years while earning interest from offsetting the debt (stoozing) is profitable if you manage your sums

Newbie_John

https://forums.moneysavingexpert.com/discussion/comment/81978599#Comment_81978599

I agree, but if you asked 1000 people to stooze - a good few would end up in a debt they otherwise wouldn't have. It's a game which played carefully can be very benefitial - but not easy money for all. I have about £20k stoozed in pots that I won't touch unless have to pay the related debt - I know quite a lot of people that would see it sadly as easy money to spend.

Thats all I meant.

The_Groat_Counter

https://forums.moneysavingexpert.com/discussion/comment/81978677#Comment_81978677

Totally agreed. People can and do get themselves in spectacularly horrible messes with credit card debt.