Using a credit card to pay off a loan

[tigwig]

I had a loan of �4000 taken out over 5 years which has approx �3800 left on it. I have been paying �81.37 monthly for it for 13 months now and wondered if it would be a better or worse option to use my credit card to pay it all off (it is a flexible loan) The interest rate on the credit card is 1.167 monthly and I would aim to clear the debt off it in 2 years max.

[Loosehead]

depends entirely on the interest rates concerned. If you could get 0% cards ad infinitum at a year at a time then you'd be paying only the transfer fee then you could card surf it away, however this requires discipline. If you want to pay it off quicker just overpay it you'll be surprised the effect even a �10 a month overpayment will have.

[tigwig]

I have stated the interest rates already but I haven't even thought of making over payments. Is this something you can do as and when you choose or do you have to know in advance how much more you would like to pay off and would it be better to do that or to use the credit card?

[Ethel]

1.167 equals about 12% interest rate - is there a transfer fee as well?

Can you increase the payments on the loan?

[bednobs]

it would be better to pay the loan. You have already paid the interest ont the loan (hence why you've only actually paid off 200 quid despite paying over 1000 pounds)
therefore if you transefer it onto a credit card you would have t pay not only a transfer fee, but more interest. if the loan is "flexible" (what does that mean?) they might let you make overpayments as discussed

[tigwig]

It is an existing credit card with a zero balance at the moment and has a credit limit of �5500 will I still have tp pay a transfer fee? The flexible loan means there is no charges for paying it off early

[bednobs]

then definately just pay the loan sooner!

[tigwig]

by making over payments on it do you mean?

[bednobs]

either that or if they wont let you overpay monthly then put the extra money you would be paying off the credit card(so that you could pay it in 2 years) in an account till you have the amount and pay it off in one go

[tigwig]

Thats a good idea thanks

[Loosehead]

Well asuming the rate on the loan is less than 12% (sorry can't be bothered to work it out from the repayment) then it is better to pay the loan. The loan is probably just the same as any bank account, Ie, sort code + account so just pay what you can into that when you can. If it's "flexible" then I imagine it has in built provision anyway.

[Postdog]

Dunno if it's already been said - got a bit frightened by some of the earlier answers and wanted to get in quick.

Whether you do this as a transfer of funds or withdraw cash to pay it, it WILL count as a cash transaction, and a cash transaction on a credit card - especially a big amount - is a very very very bad idea. You will be paying interest from day one, on a daily basis, possibly at a higher rate than for purchases, until the amount and any accrued interest is cleared. It will take forever.

Best bet if you really need to to something is see if you can get another loan at a lower rate than you are currently paying or as I think said, overpay if you can.