Loans to Credit Cards?

A question about : Loans to Credit Cards?

Hi there,

Im after some advice on what to do about my mishmash of credit cards and my car loan please.

Currently I have:
1x Texaco credit card fixed at 3.2% (I think it is?) for the life of the balance.
1x Egg card which 0% for 6 months has ran out.

and

1x Cahoot flexible loan at 8.8% for my car.

Now...because they're all over the place Im considering taking advantage of a 0% interest rate for the longest period I can find....then once it's over, transfer again and so on.

Question is I dont think I can get a high enough credit limit to cover all of the above...so is it wise to get a couple of 0% credit cards to cover them?...obviously the car has the biggest outstanding balance and Im wondering if its wise to transfer it onto a credit card instead of the personal loan company?.....will I get the same sort of payment protection?.....is there any risks Im unaware of?

As long as Im diciplined enough to keep transfering from 0% to 0% each time I should stay interest free, pay them off quicker and save some precious pennies right?

Thanks in advance

Andy ;D

Best answers:

• Have to be careful, because you don't have any guarantee that 0% will continue to be available. You don't want to put it all on 0% for 6-9 months and then end up paying 18%.
  It partly depends on how quickly you can pay down the balance. If you can get it at 0% for 9 months, and at the end of that time you can have it paid down to half of what it is now, you will be ahead of your 8.8% loan even if you end up paying at 18% -- because the 8.8% will have been on the full balance at first, while the 18% will only be on half the balance.
  That said, 8.8% is not a great rate, so even if you can't get 0% 6-9 months from now, you can probably get a loan for not much worse than that, so it may be worth it.
  3.2% life of balance is a pretty good deal, I would be inclined to leave that right where it is and worry about getting rid of the other debt first.
• Thanks DiggingOut....good point.....so it's wiser to get rid of 1 at a time....Egg card is the lowest....so swap that to 0% now.....or as another thought....should I pay it off with my loan for now so I have 1 less outgoing a month?....does mean my loan increases but then I could transfer over to a lesser APR loan afterwards?.....and like you say...leave the texaco one as it is.
• How much do you have on egg, and at what APR? How much on cahoot?
  You say your cahoot loan is flexible, how flexible? If you pay extra on it, can you borrow back those extra payments later? If so, that would make a huge difference in what is best.
• About 1k on Egg at 14.8% I think...and Ј4400 on my cahoot...at 8.8%....and yer it's flexible because I can delve into it again each time if I want!....ive worked out though I only have about 26 months left to pay this off, so is it wise to transfer onto a card loan instead and extending my payoff time?....or by transfering to a cheaper loan...because although it'll be cheaper, Ill have to do it over another 3 years and really I want to get rid of it ASAP.
• I'd be inclined to try another 0%, put all of the egg balance and half of the cahoot loan on it. At the end of the 0%, if you can't get another one, you can always put the remaining balance back on cahoot, right? And meanwhile your cahoot balance will have been going down as well.
  If you get another 0%, depending on your balance, you may want to put all of it on the new 0% card, or just part of it again.
  By leaving some on cahoot, you keep your loan account open, so you have it to fall back on if you can't get a 0% card.
  When you get the balance low enough, it will be worth closing out the loan for 0% cards because the balance will be so low that a higher rate of interest won't matter that much. But for now, you want to keep the option of putting it all back on the loan.
• Aha!...I see....good idea!....could I use Egg again by paying off my egg card with cahoot....then transfering the balance back onto the card again to take advantage of their 0% until Jan 2005?....or is it for new customers only?....save me applying for a new card again.
• Not sure exactly on egg. I'm pretty sure it is new customers only, but some egg cards have a 0% anniversary offer. Might ask that on the credit card board.
• Thanks Digging Out....appreciate the advice!
• Desperate for a bit of free financial advice and assumed this would be the best place to come!
  so here it is........in 12 months time i will be moving to america for a couple of months. i would greatly like to be clear of debt and not have to worry about minimum monthly payments while i am there.
  Since i was 18 i have accumulate store cards, one stands at Ј480 and another at Ј165 the apr is around 26% on these.
  I have a Barclay card which i have maxed at Ј500 at 17.9%
  An Egg card which i had a store card balance transfered, maxed at Ј500 0% until Oct 2004 then 13%
  I have 2 overdrafts - one for Ј1250 and another at Ј1000 but these are Student accounts and interest free for another 3 years.
  I thought the best solution would be to get a Ј2500 loan to cover the Ј610 store cards, Ј1000 in credit cards and use the rest to clear other niggley debts such as to friends and family and a years min pmt on mobile phone. Ј2500 would suit me fine and i would be able to pay Ј210 each month for the next 12 months. The problem is no-one will give me a loan because i am a student!
  Any advice?? a problem shared certainly is a problem halved!!
• acheekymunky: In fact replacing credit card debt with a loan (i.e. another debt) is probably a problem doubled, not halved. You have to sort out the underlying spending problems, because otherwise you'll just end up maxing out your cards again. The BIG danger here is that you're planting the seeds of a really massive problem a few years down the line, so you should be thankful you have a chance to sort it out now.
  By my reckoning, on the debts you currently admit to, you have about Ј5000 outstanding, which you've built up over a few years - carry on like this for a few more years and you'll have 10K of debt. Unless you act to reduce this immediately while you still have the advantage of 0% on the overdrafts and so on, it will increase rapidly and become a dreadful burden around your neck in a few years time.
  You only have to read other people's stories on this board to see what you are heading towards - perpetual stress, inability to control any aspect of your life, impossibility of buying a house, relationship difficulties, poverty in retirement etc etc etc.
  Bear in mind too that spending an extended period in the US, although cheaper than here, is going to be expensive for you unless you're working and have something available for accomodation.
  You need to look carefully at your spending, and figure out what is genuinely essential (e.g. food and lodging) and what is luxury (e.g. mobile phone - honestly, you can get by in life without one of these). Make a budget, and stick to it, and be absolutely ruthless about what is essential and what isn't. A lot of unnecessary spending comes from habit and peer pressure - figure out what you actually need to spend to stay alive, and ditch as much of the rest as possible, putting the savings towards clearing debt with the highest interest rate debts first.
  26% is a silly interest rate to be paying on anything, even though the amounts aren't huge. See if you can get a decent alternative lifetime of balance transfer deal (probably not a 0% deal with your history) and switch the debt to these. Then destroy the store cards.
• I'm not sure what a loan really does for you. If you can pay Ј210 / month, you can clear up that high interest debt very rapidly, and loans are inflexible. What you really need to do is stop spending and pay even more on your debt.
  The fact is, any legitimate lender will think it is too risky to lend to you. The ones that would "give you a chance" would charge an exorbitant interest rate, and you would be worse off than you are now.
  I know that probably isn't what you want to hear, and I'm sorry about that, but it is almost certainly true.
  Tim is right, you sound like you are on a one-way road as far as debt is concerned. Get off of it now, and you will always be glad you did.
  Good luck.
• I have about Ј5,000 of my car loan left to pay, at 12.9% on a HSBC bank loan.
  I would like to transfer to a life of the balance credit card, but how do I know the credit limit will be big enough to transfer this loan? ???
  From
  Confused of Kent !
• Don't all credit cards require you to pay approx 2% of the outstanding balance on your card as the minimum payment each month?
  If so, the minmimum payment be a lot higher than the actual loan repayment figure on a high value loan.
  In such cases, while you'll pay less interest overall by switching from loan to credit card, you'll probably have to pay more back per month (initially) for this benefit.
  Has Martin or anyone factored this in to their credit card versus loan calculations?
  Darryl.
• MBNA charge the lower of a number of figures, min. payment works out at Ј5 on my card. Not sure on LOB offers from them though.
• Taken from the FAQs of the new Texaco 3.9% LOB card:
  Quote:
• DiggingOut
  I agree with you - if you can afford the higher repayments then the 'switch to LOB credit card' idea is a good one.
  True, you can't get a standard loan over 20 years. But, if you can, adding your loan amount to your existing mortgage debt is usually one of the cheapest ways of borrowing, so should be considered IMO.
  You can get 'normal' loans over 10 years, and for 10k borrowed, the repayments would be approx. Ј110 per month (at approx 6.1%). Again, lower repayments for a good few years when compared to the minimum payments on a credit card for the same amount.
  Don't get me wrong. I like the idea of switching debt to cheap credit cards. Just thought I'd point out the potential downsides to the idea, as I hadn't seen it mentioned (not even by Martin) before.
  Darryl.