Cheap Credit Card Loans

Cheap Credit Card Loans, surely there’s a catch! Some say that credit cards are an expensive way to borrow money, well not necessarily. We’ve researched the best credit card offers in the market, and come up with some real winners.

The cheapest credit card deals undercut the cheapest personal loans, yet allow more flexible payment options.

Clearly you’ll need a reasonable credit rating to take advantage of these opportunities*.

The options depend on what you need the cheap credit card loan for:-

1.   For a cash lump sum or to purchase goods where you can’t normally pay by credit card

Firstly, don’t just take a ‘cash advance’ from your existing credit card, you’ll be paying the credit card issuers top rate of interest and you’ll be charged a big fee for withdrawing cash. Some credit cards are now charging 5% (min £5) on cash advances!

Many people aren’t aware that there are credit cards on the market that give you the opportunity to make money transfers from the card straight into your bank account. There’s usually a fee involved of around 4 %, but overall you’re still likely to be better off.

The AA Balance Transfer Credit Card is currently offering 0% interest on money transfers to your bank account for 16 months. If you are likely to clear the loan/money transfer within 16 months, this is clearly an excellent deal. (Representative APR 17.9%).

If you don’t think you’ll be able to clear the loan within 16 months you have another option. Providing your credit rating is satisfactory, you can simply apply for the best balance transfer offer around at the time, and move any remaining balance to the new offer. You’ll need to do that in plenty of time for the paperwork to be processed, usually around 2 months.

2.   If you want to make a large purchase where the retailer will accept credit cards

Currently our longest 0% interest on purchases offer is on the Tesco Credit Card. This gives 0% on purchases for 16 months (Representative APR 16.9%). Maybe an ideal way to spread the cost of your summer holiday! Alternatively, you could follow the process above and get 20 months to pay off your purchases, interest free!

*Critical things to note before embarking on credit card loans

  • Remember, most 0% interest on balance transfers and 0% interest on money transfer offers have a time limit, and so the time when you need to take advantage of the offer after receiving the card is normally limited to 60 or 90 days. If you want to work the system, don’t get caught out.
  • Many credit cards offering 0% or low rate deals will charge you a balance transfer or money transfer fee, typically 2 to 3%. This will may be higher if you don’t advantage of the offer in the first 60 days of receiving the card.
  • Don’t consider credit card loans as an option unless you have a decent credit rating. By this we mean you’re likely to be over 23 years old, in stable employment earning over £20,000, registered on the voters roll, and that you have a track record of positively managed credit agreements either with personal loans or credit cards.
  • If you do use credit cards to facilitate a loan, make sure you repay the credit card debt just like a personal loan. Decide on the amount you can afford to pay off per month, and set up a fixed online payment every month, or a direct debit to ensure that the loan is cleared within a fixed period or it could end up costing you more than a traditional personal loan. Don’t forget with a credit card loan, you have some flexibility as you can increase and decrease the amount you pay each month, or pay off lump sums, with no notice to the lender. Obviously you need to ensure that you always pay the credit card minimum payment, and that you don’t take on debt or commit to repayments that you can’t afford.
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