Interest free credit cards

[Derek Smith]

I'm financially a beginner.

I have a credit card that I pay off monthly. I want to buy something for a little over £5000 in about two months.

I can pay for this out of what remains of my savings but the interest rate I get is quite high.

I have read of these credit card transfers where you can get 18 months 0% interest rates for an additional 3.2% on the sum. The APR is somewhat less than my savings are getting.

My question: Is there anything to stop me buying the item then transfering the lump sum to one of these offers?

Or have I worked it out wrong?

[miniman]

If you can find the right deal then that's exactly what you can do. And at the end of the interest free period, transfer it to another card, and so on ad infinitum if you wish.

Check whether the transfer has to be from another card, but normally they send you a load of cheques for balance transfer purposes.

[Bing o]

You need to:

1. Post this in the Finance Forum

2. Buy it on another Credit Card first, then transfer it to the 0% deal

3. Stop posting on the bank threads if this is the extent of your financial knowledge

HTH

[illmonkey]

I don't know if I follow. Are you planning on taking out a card on 0%, with a balance transfer of 3%, then paying the total amount off at once? That'll cost you £150 for the balance transfer. If this is the case, why? Just move the £5k to a bank account and pay on a debit card, saving the balance transfer of 3%.

Or do you want to keep the savings (knowing you can clear it at any time) then get the purchase on a card and pay it off slowly? So you'd get a 18 month 0% with BT of 3%, then pay £277 a month for the 18 months to clear it.

[alangla]

A quick look at Money Supermarket shows that RBS & Natwest are doing cards with 0% on purchases for the first 13 months (must have a current account with them) and Sainsburys are doing one with 0% for first 12 months (must have a nectar card). Why not take one of these and pay it down at the minimum rate per month before paying the remaining amount off in month 12/13 using your savings. That way you can pocket the max interest value from your lump of cash & not have the debt hanging about for too long.

[oyster]

Apply for 2 credit cards.

Card 1 - An Amex cashback card. For that £5k spend you'll get £130 in cashback. Apply using a cashback site to get £10 back.

Card 2 - A 0% balance transfer card (with a BT fee of approx 3%). Again apply through a cashback site to get £15 back

Net cost of this approach: -£5!!!

Job's a good'un.

Edited by oyster on Tuesday 12th April 11:17

[Derek Smith]

Thanks Miniman

illmonkey said:

Or do you want to keep the savings (knowing you can clear it at any time) then get the purchase on a card and pay it off slowly? So you'd get a 18 month 0% with BT of 3%, then pay £277 a month for the 18 months to clear it.

I want to pay the minimu for 18ths mnths then pay off the whole amount from savings, saving me a few pounds.

It seems too good to be true, always assuming they accept I suppose.

[illmonkey]

Derek Smith said:

Thanks Miniman

illmonkey said:

Or do you want to keep the savings (knowing you can clear it at any time) then get the purchase on a card and pay it off slowly? So you'd get a 18 month 0% with BT of 3%, then pay £277 a month for the 18 months to clear it.

I want to pay the minimu for 18ths mnths then pay off the whole amount from savings, saving me a few pounds.

It seems too good to be true, always assuming they accept I suppose.

The hope is you forget and go onto the 20% rate. set a reminder on your phone or emails and you won't forget.

[cuneus]

illmonkey said:

The hope is you forget and go onto the 20% rate. set a reminder on your phone or emails and you won't forget.

or in this scenario set up a standing order

[theaxe]

You could get an M&S card which gives you 15 months at 0% for purchaces, saving you the 3%.

[youngsyr]

Alternative option to earn you 2% immediately on the purchase, assuming you can make the purchase on a credit card (and an American Express credit card at that, check with supplier before committing):

https://www212.americanexpress.com/dsmlive/dsm/int...

You then wouldn't need to mess around with balance transfers to earn your 2%, but you would have to wait for a year to receive the 2%.

Or, if you really fancied messing around and the rate on your savings is sufficiently high to justify the hassle, do the above, then transfer the balance to another 0% interest card to earn the £100 cashback from the purchase (2% "interest") and the margin on your savings less the 3% balance transfer fee.

[oyster]

youngsyr said:

Alternative option to earn you 2% immediately on the purchase, assuming you can make the purchase on a credit card (and an American Express credit card at that, check with supplier before committing):

https://www212.americanexpress.com/dsmlive/dsm/int...

You then wouldn't need to mess around with balance transfers to earn your 2%, but you would have to wait for a year to receive the 2%.

Or, if you really fancied messing around and the rate on your savings is sufficiently high to justify the hassle, do the above, then transfer the balance to another 0% interest card to earn the £100 cashback from the purchase (2% "interest") and the margin on your savings less the 3% balance transfer fee.

It's better than that - see my earlier post.

[youngsyr]

oyster said:

youngsyr said:

Alternative option to earn you 2% immediately on the purchase, assuming you can make the purchase on a credit card (and an American Express credit card at that, check with supplier before committing):

https://www212.americanexpress.com/dsmlive/dsm/int...

You then wouldn't need to mess around with balance transfers to earn your 2%, but you would have to wait for a year to receive the 2%.

Or, if you really fancied messing around and the rate on your savings is sufficiently high to justify the hassle, do the above, then transfer the balance to another 0% interest card to earn the £100 cashback from the purchase (2% "interest") and the margin on your savings less the 3% balance transfer fee.

It's better than that - see my earlier post.

Sorry, somehow missed your earlier one. Do you earn the 1% or 1.25% normal cashback on the balance of the £5k after the initial £100 then?

Edited by youngsyr on Tuesday 12th April 11:37

[jesusbuiltmycar]

Be warned many of these cards require a minumum amount of card use per month and any money paid off comes off the balance (not the new purchases) - this means that credit card company can start charging interest on the new purchases.

[theaxe]

jesusbuiltmycar said:

Be warned many of these cards require a minumum amount of card use per month and any money paid off comes off the balance (not the new purchases) - this means that credit card company can start charging interest on the new purchases.

I thought the rules had changed on this so that the debt at highest interest was paid off first...

[jesusbuiltmycar]

You could be right - I was caught out like this 8 years ago, ended up paying interest for 1 month, as soon as I reaslised what was happennig I cleared the card immediately.

[audidoody]

And if you're five minutes late on a monthly minimum payment they'll whack full interest on the whole amount.

[pimpin gimp]

I've never had to use a 0% card monthly before, and used natwest plat, egg card, barclaycard plat, sainso's card, capital one etc. Ok they're all the bog standard cards, but i figure if you had to adhere to silly rules on any card it'd be those boggo ones.

[youngsyr]

audidoody said:

And if you're five minutes late on a monthly minimum payment they'll whack full interest on the whole amount.

Not really an issue - just set up a direct debit for the minimum payment amount with the card company and you'll never miss a payment (providing you have funds in your current account).

[supersport]

This works an absolute treat, although it is not as good as it used to be. At one point I had £20K of credit card companies money invested in ISAs and other places (montly saver at 12%) at very good rates. Once in a while a card comes up with no transfer fee so you just transfer on and keep the money invested.

Sadly with interest rates being so low it is no longer worth the effort. But if you happen to have a good rate on your savings go for it.