Interest Free Borrowing

[K87]

Hi All,

This is my first time thinking of getting a credit card so looking for some advice.

I currently have £500 on an overdraft which I am being charged for every month, not a huge amount but every little helps.

I should be able to save this amount up within 3 months.

My thought is to get a credit card which offers interest free purchases for the first 3 months. Find someone who is making a £500 purchase, shouldn't be too difficult amongst family or friends. Put the purchase on the credit card so it is interest free for 3 months, they give me the cash which I use to pay off the overdraft then I save up over the 3 months to clear the £500 purchase off the credit card before the interest kicks in.

This should also help start building up a credit rating.

My two concerns are being able to get a credit card which offers interest free purchases, and finding someone who is making a £500 purchase.

Other than those concerns are there any legal terms that I would be breaching by doing this?

Regards

[surfymark]

Should be fine but there are some credit cards that allow you to a balance transfer into a bank account.

MoneySavingExpert would be best for this sort of info.

My advice would be to be very careful! It is easy to get to the end of the agreement with no way of paying it off. Be very disciplined about saving (or paying off) a little each month and aim to have it covered by the end of the interest-free period.

HTH
M

[K87]

Well I've been accepted for the credit card! Lloyds advance mastercard, 6 months interest free on purchases. After that it doesn't say anything about even interest free if paid off the same month so I shall probably get rid of it by then.

Paying off in 6 months will be fine, I've just moved closer to work so will be saving an extra 200 a month. Worst case if the 6 months come up I can go back into the overdraft to clear the remainder which would be cheaper than the credit card interest.

I looked at balance transfers but they generally have a 3% charge so that not much less than the overdraft costs.

[Kudos]

Assuming 20% (high!) bank interest, you'll save approx £30-40 quid

[K87]

I think the interest on the overdraft works out at about £10 a month so it's not too bad but + have a student loan and career development loan which are racking up interest too so if I can clear the overdraft off quickly I can then start overpaying the loans.

Edited by K87 on Thursday 12th January 13:55