Money transfers with credit card

[Paul2023]

Hi all. I have a Lloyds credit card, it’s got a maximum of £5000 on it. I currently owe £500 on it.
Im due to have some garden works done and which cost £2000. If I want to transfer the money to my bank account there are two options; either pay back over 12 month at 0% or pay over 24 months at 6.9 %.

Both of these options would mean I have to pay high might monthly payments which I can’t really afford. My currently minimum payment is something like £25 per month.

I do intend to pay the balance off over time , but not at the fees they offer. Would it just be cheaper to withdraw the cash from an ATM ?

I know my balance would obviously go up but my monthly payment would be presumably cheaper ? I can then just switch to cheaper credit cards at 0% every time I need to.

Does that make sense to anyone?

There are a few things that have been overlooked: the % transfer fee to get the 0% cash and the fact you can’t afford the monthly repayments. The higher interest buys you time, but it’s a far more costly option. Even if you intend to transfer to another 0% credit card later, (a) there would be a transfer fee again (b) you might have a worse credit rating because of this borrowing and (c) this debt could spiral so much that you’d not be able to pay much more than the minimum payments each month.

Could you find a way of making more money? Easy to say, I know. I’d never draw credit card money out from an ATM. Huge mistake! Get a loan if you have to,

Do not withdraw from an ATM. This would usually be considered a Cash Advance at a much higher rate of interest applied immediately, so very costly.

If you go ahead with the Money Transfer, you might want to consider borrowing the extra £500 to then immediately pay off the balance you currently owe, as you presumably are accruing interest on this.

Can you pay more than £25 per month? Ideally, you'd want to pay about £200 per month to clear the debt before accruing interest. If you can't pay more, are the garden works truly necessary, or can you wait and save up after paying off the current debt?

If you can't afford the repayments then perhaps you should think hard about doing your garden works now/at all. Perhaps you can do it in affordable stages, or do some work yourself...or whatever.

Pulling cash out on a credit card charges 39.9% interest.
doing a cash transfer charges 0% interest.

it is cheaper to do the money transfer - if it’s over 12 months the repayments are usually 1% of the balance - so £20 a month, but if you wanted to pay it off before the end of the 0% period you’d need to pay around £180 a month.

Hi again , change of circumstances. My mother in law kindly gifted us some money enough to cover these works and pay off my credit card. I’m so very grateful and it’s just coincidence she did this for us, we didn’t ask.

However we need a new boiler soon and although you can get on finance , there’s APR to pay.

We’re actually thinking of getting a heat pump, depending on the price and it’s it’s possible. However , as we’d need to pay approximately 4 k, we’d need to fund it somehow. Octopus offer finance at 9.9% APR over several years.

I may be cheaper for me to get a new credit card and pay for the heat pump
with that ? My credit card has now cleared so I don’t need a balance transfer, so do I look for a 0% purchase credit card ? What’s the best option to look in this case?

I should add our boiler is almost knackered, that’s why we’re looking at new boilers and possibly a heat pump.

I really think you need to learn about how credit cards work! Money Saving Expert may help you. I mean this nicely, but your lack of understanding is going to cost you dearly.

You can apply for a new credit card and use that for the boiler then (as long as you have enough credit) balance transfer the £4k to the other one for a 0% balance transfer. You will have to pay a % fee to do this but you will then have a longer time to pay the money back. If you aren't paying enough to pay it back in the 0% time frame, then you could potentially do another 0% balance transfer again (again paying a transfer fee).

I cannot stress enough that if you can only afford to repay £25 a month, then you can't afford to do this. You will be looking at years and years of debt.

I would put off the gardening work until you have at least some money towards it. This is how folk get into deep water with debt. Then suddenly another urgent bill comes along and you are unable to pay it.

I've just seen your last post. Honestly you need a reality check re spending. I can't stress enough if you are short on money stick to the absolutely urgent and necessary jobs.

A working boiler is an essential for most people, and better to plan before it is an emergency in the depths of winter.

You need to check that your boiler installer accepts credit card payments first. If not, then you might be better off with a 0% Money Transfer card. There'll usually be a small one off fee to transfer the money into your account. (A one off 4% is much cheaper than a monthly interest rate.)

Then, you must be sure to calculate your payments to pay off the full balance by the end of the offer term. If not, they might charge you interest on the full amount borrowed, backdated. Very expensive. Although, most cards would only start charging interest on the remaining balance after the 0% offer term

If you couldn't afford to pay it all back within the 0% offer term, the Octopus deal over a longer term could be safer for you.

£25 a month is £300 a year. It will take you over 13 years to pay back £4k and that's before you pay any interest.

Can you pay them through PayPal, using that card?

Do take note of all the good advice you have had on here. You have been gifted money and you should use it by prioritising essential. Is the garden an essential or could you deal with it yourself? The boiler is an essential if it is really at the end of its life. We hear about heat pumps but I would assess the cost of purchase plus the saving you are likely make. Believe me when I say lots of things are good to have but being able to live relatively debt free on the income you have is a blessing. To be able to face bills coming in and sleep at night is a joy beyond a special garden or a heat pump. Both can come at a later date when your income is able to stand these extras. Take care and think before spending. Easy to muck up finances and so difficult to extract yourself from a mess.

Thanks for the responses, I’ve had the garden work done and paid off my credit card so there’s zero balance on it. Yes I can afford monthly payments, and if I had a 4k boiler, or heat pump then I’d plan to pay it off within two years. Such as overtime that I do.

My boiler is almost on its last legs, my main question here was that it may be better to just pay off using a 0% credit card rather than paying on finance which usually comes with an APR cost.

Loans are easy to understand, you get a loan over a period of time and you know what you’re paying over that term. I find credit cards a little more difficult to understand because there’s usually different interest rates that change for example, 12, 18 or 24 months.

Im not I’m not the only one who finds credit cards a bit confusing..

I don’t need a balance transfer because I have zero balance on my existing card.