monsterlane Posts: 42 
16 March at 5:16PM in Credit cards
Hi there everyone, I have loan with first direct that is roughly £300 a month, I’m looking at options to lower that monthly payment for a few months, there is £7000 left to pay but I’m thinking of some options to pay it off like a balance transfer or money transfer card.
I have a NatWest purchase and balance transfer card with min payment of 1% of balance which should save me a chunk each month just to give me extra money to invest in my business. I’ve started a grass cutting business last year and have got a couple of commercial contracts that don’t start until end of July 2024, but when it kicks in I’d be able to pay off the £7000 by early next year. Any advice would be great thank you.
Brie Posts: 9,548
Forumite
16 March at 6:25PM
First thing to look at is if there is an early redemption fee for the loan. Second thing to look at is could you afford both some loan and the minimum required payments on the card if you did a transfer. Finally is the transfer period long enough for what you're trying to do or will you have some way to clear the balance when the 0% term ends. Interest at that point will soar to an eye watering level.
You can't use a BT or a card in general to pay off your loan so the Natwest card as it is won't help. If they off a money transfer deal then you could pay a junk into your bank account and pay down the loan from there.
And stating the obvious hopefully, if you do a transfer of any sort don't try to use the card for purchases as well unless it specifically states that you won't be charged interest. What happens too often is there's a transfer offer for, say, 18 months but a purchase offer for 3. If you do both transfers and purchases after 3 months you will be paying interest at a high rate until the amount of the purchases are paid in full. So best to decide to do one or the other.
"Never retract, never explain, never apologise; get things done and let them howl.”
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monsterlane Posts: 42
Forumite16 March at 7:58PM
Hi Brie and thank you for replying. I took the NatWest as a 0% purchase card and its offer is 22 months purchase at 0% and it also had a BT option at 18 months. Like you said I don’t think banks let you pay off loans with a credit card, I’ve not asked first direct about that but I imagine they don't allow it. I have a MBNA card I could use which has a money transfer option and has the required credit limit. I just don’t know what to do yet, I’m leaning to the money transfer as I could really do with putting extra money into my business as I want to add different strings to my bow and then early next year pay it all off.
BoGoF Posts: 6,910
Forumite16 March at 8:02PM
What is the⁹ limit on the MBNA money transfer and what is the fee? What would then be the fee on the balance transfer to Natwest and is the credit limit on that high enough?
What is the APR on the loan?
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monsterlane Posts: 42
Forumite16 March at 8:11PM
BoGof thanks for commenting. I took the loan out 4+years ago and think it was 7.4%. The MBNA card has a £10000 limit on it and has 2 money offers at0%over12monthswith a4.5% fee and the other is6.9% p.a.over24monthswith a0% fee. The NatWest card has £7500 limit.
BoGoF Posts: 6,910
Forumite16 March at 8:19PM
monsterlane said:
BoGof thanks for commenting. I took the loan out 4+years ago and think it was 7.4%. The MBNA card has a £10000 limit on it and has 2 money offers at0%over12monthswith a4.5% fee and the other is6.9% p.a.over24monthswith a0% fee. The NatWest card has £7500 limit.
Is the £7000 an actual settlement figure? £7000 with a 4.5% fee would mean £7315 to be transferred to Natwest but normally you can only BT 95% of your available credit so you are slighly over.
What you are proposing makes sense as long as your clear the Natwest card in the 24 months.
monsterlane Posts: 42
Forumite16 March at 8:35PM
I asked for a settlement figure last year when I was looking at doing something and think the settlement was for £7500 but that was last year so probably be £6700 ish. So I should be fine for credit limit. I want to pay it all off early next year but worse case scenario when 0% runs out I’ll probably get another transfer card but that’s absolutely worse case as you never can predict business but all good so far. Thank you so much for the comments.
BoGoF Posts: 6,910
Forumite16 March at 8:39PM
monsterlane said:
I asked for a settlement figure last year when I was looking at doing something and think the settlement was for £7500 but that was last year so probably be £6700 ish. So I should be fine for credit limit. I want to pay it all off early next year but worse case scenario when 0% runs out I’ll probably get another transfer card but that’s absolutely worse case as you never can predict business but all good so far. Thank you so much for the comments.
Check the position on penalties/interest for early settlement/overpayments. Sometimes you are best making an overpayment leaving a small balance rather than settling in full.
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