Can you pay off a loan with a credit card on 0% for 13months?

Question

My brother would like to pay off an outstanding loan but the only way he could do this is by getting a credit card and using the credit to pay off the £2000 loan.

My sister told him you cant pay off credit with credit. Does anyboy know if this is true?

Could he pay off his loan with a credit card?

Answer 1

Yes, it's called a balance transfer.

Answer 2

Yes

The terminology is balance transfer. There is usually a charge for this of between 2 - 3% of the amount being transferred.
2% - £40 2.5% - £50 3% - £60.
You need to read the small print as some credit card companies will, and others will not allow it.
You also need to read the small print of your loan as an early settlement may incur an early settlement fee. Again some companies charge this and others do not.
The art to this technique is to save interest payments, but do not forget to carry on making payments to the credit card during the period to reduce the amount, you can then near the end of the 0% period apply for another credit card and transfer again.
A few years ago there was no charge for this, but the Credit companies were not making the money so hence the transfer fee which is becoming the norm.

A good website for free finance advice is:

www.moneysavingexpert.com

it is an independant site and therefore does make money from pushing any particular organisations. Unbiased market research for free covering all aspects of financial life and more. Give it a go.

All the best and
Hope your brother beats the banks at their own game.

Answer 3

Yes you can pay credit with credit. It's called balance transfer. It's not that you don't owe anything, it's just that you owe it to someone else now. Call the credit card company and let them know that you want to pay that other loan with their card. They may let you know that 0% APR is for purchases only, then you're out of luck. If cash advances or balance transfers are qualified for 0% then, they will let you use an access check. Just be very careful with this type of transaction, as card may say there is no interest charges, but say a 3% transaction fee or something like that, which in my book is still a finance charge.
I hope I answered your question.

Answer 4

Read the fine print. Most 0% credit card rates don't apply to cash advances. If it doesn't, it's a bad idea.

Credit card companies do not pay the stores $100 for every $100 you spend. They make money that way, and can afford to give you 0% interest. Not so when they give you $100 for a $100 loan.

Answer 5

There is nothing legally stopping him doing this but just wondered why he would want to? If he transfers the amount to the credit card he will be asked to pay a minimum payment of 3% which is £60.00 - obviously he could pay more. If he definately wants to go down this route i would advise him to pay off the £2,000 within the 13 months before he starts paying interest on the balance (£154pm).

Could he not just make extra payments on the loan to clear it?

Also make sure he asks if there is an early payment penalty - some loan companies sting you with this.

Hope this helps x

Answer 6

you can normally only get 0% interest from a credit card if you transfer a balance from another card but this would normally only last for 6 months and I think you would have to agree to stay with the new card for a specified minimum time normal credit card interest is much higher than a bank loan so think very carefully

Answer 7

He can - but make sure that the interest rate is not higher on the card if he does not pay back the loan before the 0% interest is up. They always give you some checks that you can use - but be careful he does not do this alot - he can get into deeper debt.

Answer 8

Credit card debt reduction has become a necessity because of the numerous negative impacts of improper and mindless use of plastic money. Be it carelessness of usage or the conceit of users, whatever be the reason, credit cards can effect on your credit standing in a negative manner. Due to easily accessible facilities of credit cards, people can hardly resist of stocking and adorning their wallets with plastic money. Being an almost inevitable vanity of each wallet, these plastic cards have become more preferred mode of transaction than cash. As these cards are simpler and quicker sources of money, users are more focused on the advantages than to fathom its disadvantages on their financial conditions. Therefore, a lions share of credit card users ends up accruing poor credit status and become ineligible to receive loan approval and not to mention other negatives of a poor credit rating. This is the reason why one should consider credit card debt reduction or credit card debt consolidation to get out of the trap and become debt free.
Read more about it at:http://www.card-gallery.com/article/169,How_Credit_Card_Debt_Consolidation_Can_Help_Improve_Your_Credit_Standing

Answer 9

Yes, he can. If you read the "Terms of Agreement" they call it a "BALANCE TRANSFER".

Credit card companies do this all the time. The Idea is that the new bank issuing the credit card wants to collect the interest. They hope that you will only pay the minumin payment. So that there is still a $1700.00 balance at the end of 13 months that they can charge interest on...


The only time Balance transfers are not allowed is with same company offers....

So you cannot transfer BANK "A" to another BANK "A" card, but you can transfer BANK "A" to BANK"B"

Answer 10

Sure he CAN do it. I think what your Sister is getting at relates more to SHOULD he do it. To make that determination, you must look at the terms of both loans and compare rates, term and payment. If he is having problems making the payments on the 2,000 loan, then moving that debt to another source wont magically make it to where he can pay. It will just prolong the problem.