0% money transfer card or loan?

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I need to borrow £2500. I start a year-long course in September and the fees are £2750, of which I have paid £250 already. I'm really excited about the course and it will potentially mean a career change for me in the future.

I have been left £15k in inheritance from a relative, however their house has not sold yet so I cannot receive the money yet. I had planned to use some of the inheritance to pay for the course, but as it's turned out I won't receive the money in time. So I'm looking at borrowing the money and then paying it back once the inheritance comes through.

Is it better to borrow £2500 on a 0% money transfer card or take out a loan? The 0% money transfer card would mean I'd have 12 months to pay back the £2500 at 0% interest. That would mean an average of £208 per month, which to be honest would be tight financially for me right now. However, the house might sell in the next while and I'd be able to pay it all back straight away.

The other option is a loan. I've been pre-approved to borrow £2500 over 5 years, with repayments of £61 per month. I would obviously be paying interest if I did it this way, but the monthly repayments are much lower and there are no penalties or limits for early repayments. So when the house sells I can pay it all back early and no longer pay interest.

What would you do?

I’d take the loan, but only if there are definitely no early repayment charges. I did this to buy my car and then paid the loan off penalty free, 6 months later, when I was then in a position to. My loan was Novuna and was really straightforward.

I agree

How much interest will you pay on the loan?

You can get interest free cards over more than 1year.
I currently have an interest free period of 37 months

I won't do any further spending on the card. I will pay off monthly amounts that are affordable.
If at the end of 37 months I haven't paid it off, I will do a balance transfer to another interest free card.

I never ever pay interest. The balance transfer fees are considerably less than the interest on a loan.

I hate paying interest usually but, as you said, the repayments are heavy over the short period so make it easy on yourself and go for the loan. I would in your shoes. You have money coming so the interest you pay won’t be much in the scheme of things.

I hate paying interest usually but, as you said, the repayments are heavy over the short period so make it easy on yourself and go for the loan. I would in your shoes. You have money coming so the interest you pay won’t be much in the scheme of things.

You can take use the first card for 12 months at 0% then in a year apply for another 0% card and do a balance transfer onto that. (For up to about 18 months depending on the deals available at the time,) The credit card company usually charges about 3% of the transfer balance as a fee, but it works out cheaper than paying interest.

If you can be sensible with a card it's usually better than a loan.

The 0% usually has an initial fee added on
What percentage is that? Less than 3.5% would be a decent rate at the moment until December 2026 or similar

Are you considering the initial fee for the money transfer, I had an offer recently and it was 4.5%.

Hmm this is a good point. So can I get the original 0% money transfer card, have the money put in my bank account and pay for the course, then if I haven't fully repaid it within the 12 months, move the remainder onto a 0% balance transfer card?

Thank you for pointing this out too, something else to consider in my decision.

Yes. Although you need to get a card that's a got money transfer offer rather than balance transfer.
There are fewer of them about and probably the fees a bit higher and the interest free period a bit shorter, but they are out there.
Even with high fees, say 5%, on £2500, that would be a one off fee of £125. Fees will probably be between 2 and 3.5%. Much cheaper than loan interest would be over the same period.

If you look up credit cards on Money Saving expert it explains it all and tells you the best deal on each type of interest free card.
You can also do a soft search on the web site, which tells you if you are likely to pre qualify for the card without it going on your credit file with lots of searches (which you don't want)