To do this with my credit card?

[Namechangearooney1]

I have about £2k on a cc which I'm paying interest on. The same cc is doing a 0% offer when you transfer cash into your bank (with a 4% transfer fee).
I have a big limit on the cc so I'm thinking of transferring £2k into my bank then putting it straight back onto the cc to pay off the £2k balance that I'm incurring interest on. So I'll still have a 2k cc debt BUT it wont be incurring interest. The 4% fee will work out about £80.

This seems sensible to me but I'm really worried I'm missing something...am I???

Check all the t's and c's. But otherwise, go for it. If this doesn't work, you could also look into a 0% credit card transfer to a new card. So long as you pay it off within the 0% period (6 or 12 months, usually), it works well. Again there's a transfer fee.

What’s the interest rate on the current balance and how fast are you paying that balance off (if you are)?

Also, if you do that, will the 2k you pay back in go to pay off the interest paying bit or the new non interest paying bit?

If you can move your debt to something interest free then definitely do that.

Need to look the rate up but its in the 20s, I think. And yes, the money I pay back on will pay off the interest paying bit. Apparently cc companies have to allocate payments to your most expensive debt first.

If you are likely to pay more than £80 interest this might work.

Two things you need to check
Will they accept a transfer back from the same account (they may have something in the Terms and Conditions to block a money round trip) - if they do then if you have another bank or building society account bounce the money through there and back to the CC.

IMPORTANT
This is critical. Check the order in which repayments are applied. They are not always applied to the oldest debt first. If the repayments go to pay off cash advances before purchases then you will end up repaying the 0% first.

You might want to shop around for balance transfer fees. Some are 1.5%. Also what is the length of the 0%. MSE has good tables and you can do a soft search that does not show on your credit score on chances of being accepted. It's so easy. The balance transfer and setting up your direct debit is done at the time of approval.

Depending on how they calculate payments, then you could well be increasing your debt to £2080 and paying interest on it all.

Read the t&c's very carefully.

To move debt fro a high APR to a low APR it is usually better to use a different lender. Then you do not get the issue with repaying the low APR part before the high APR part.

The 0% is until the end of 2021. I don't really want to apply for another cc at the mo as I've applied for a couple of things recently and don't want it to negatively affect my credit rating.

I will double check about which balance would get paid off first.

Pay at least £200 per month off the debt. Then you will have this gone by end of 2021. The more you can pay off each month the better.

Being debt free is lovely. See videos on Youtube search for: debt free scream

Can I ask which credit card this is please I’m looking for one to pay my overdraft off

end of beginning.
Try not to have the debt sitting around too long.

It's a Virgin cc.

I'm wondering whether to transfer a bit more money out of the cc to pay my overdrafts off. I'm hoping to move this year and think it might look better to the lender if I'm not living in my overdraft constantly- I know I'd have a cc debt but that might look better than being always overdrawn?

Also we have a lot of equity in our house and we are planning to use some to wipe out all our cc debt when we sell.

They will apply any payments to the highest rate debt first - this is the rule, so it should work, as long as there aren't any T&Cs to prevent this.

It's also a good idea to transfer your overdraft over in this way, providing that you don't run it back up. It's better to have credit card debt than overdraft debt in the eyes of the lenders, and you've probably seen the news about overdraft rates increasing massively soon, therefore everyone should change their thinking about overdrafts and credit cards, and aim to completely avoid overdrafts.

However, I've applied for a couple of things recently and don't want it to negatively affect my credit rating

Can I ask what you're saving your credit rating for? At the moment, you're in debt so your number 1 priority should be to reduce the cost of that debt, and it's a good use of risking/investing your credit rating in that by looking for a cheaper balance transfer deal.

However, I'd be cautious about your plan to pay off debt when you sell your house. That is indeed a good plan, but you do need to bear in mind that you've either transferred unsecured debt to secured debt, by increasing the amount of the mortgage on your new property, or if you're not taking out another mortgage, you've effectively used your equity as a 'get out of jail free' card, which may be an issue if you haven't addressed the reason that you got into debt in the first place if this was an overspending issue rather than a one off loss of income/high childcare costs that have now passed or something else that no longer applies?

Definitely aim to stay out of debt, and build up a savings buffer going forwards, because if you get into debt again, you'll have debts and a mortgage that is bigger than it should be, leading to bigger potential problems.

I've done this before with my credit card and it's fab. The transfer charge was much less than the interest I was paying.

Most CCs are wise to this. I think you will find in your fine print that payments are applied to lowest interest balance first. So when you use that £2k to pay down the card, then will pay off £2000 of the £2040 you borrowed to put £2k in your bank (transfer fee 4%= £40 fee). You’ll still have the higher interest balance untouched.

Sorry the transfer fee would be £80 not £40.

I understand what you're saying @BarbaraofSeville but the debt was caused by a one-off financial balls-up (won't go into details as it's a bit outing). Our mortgage at the moment is quite high in terms of APR & monthly repayments. We want to move and if we do that,with the equity we have, we could pay off debt, put down a large deposit, get a lower rate mortgage and have monthly repayments that are not much more expensive than they are now.

Basically, if we move house, we could be debt-free (apart from the mortgage) and so have more disposable income.

And I'm trying to preserve my credit rating in anticipation of applying for a mortgage.

I did this once and it was no problem. Check that the credit card and your bank aren't part of the same banking group as they may not allow transfers between them.

My understanding is that credit cards are now required by various codes of conduct to apply payments to the highest rate items first.