0% purchase or balance transfer

[thehairysmite...]

Instead of getting a 0% purchase (24 months etc), are there any finance gurus on here who could explain the advantages/disadvantages of using a credit card to pay cash for a private sale? Idea is that I could withdraw, say, 2.5k on a credit card, suffer the cash advance fee and balance transfer fee and move the monies to a different, long term interest free card. Am weighing up how much this would cost in fees or interest vs the saving a would make buying a bike of that value privately. Any help?

Thanks

[ScaredyCat]

Withdrawing cash on your CC doesn't do your credit rating much good and you don't get the benefit of cc protection on it anyway. At least with a 0% finance deal you're improving your credit rating (provided you pay it off) and you get a measure of protection.

0% suggests new bike, clearly a 2nd user bike isn't going to be new - so you have that too.
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Honda CBF125 ➝ NC700X
Honda CBF125 ↳ Speed Triple

[owl]

Add up the fees and then compare it to a low interest loan from the bank. Few places offer around 2.8-3% and there's no faffing about moving money and accruing even more fees.
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Observation is the greatest source of wisdom.

[secretagentmo...]

Why not pay with Paypal and pay the seller's Paypal fee, but pay Paypal with your credit card?

Then credit card at 0% and Paypal protection!

[Freddyfruitba...]

I don't know what the cash advance fees would be on your existing card, but you can ascertain that easily enough yourself. In terms of transferring the balance to a 0% credit card, FWIW here's a quote from one of the national newspapers, today:

Quote:

It is generally acknowledged that a zero per cent card is a good deal if you are a disciplined person able to clear what you owe. However, this is not how most behave; they make the minimum monthly repayment and fall further into debt as a result of the hefty charges that apply when the interest-free period ends. The profits to be earned from such errors are the reason why more zero per cent cards are now on offer, the nation’s forgetful ways being a boon to the banks. Indeed, the banks are so sure that nobody will pay off their borrowings by the deadline that they book these future revenues up front — a controversial, but nevertheless legal, accounting ploy.

So, go figure...

[kgm]

Many of the interest free credit cards only offer interest free on purchases - doesn't always include cash withdrawals. As already mentioned credit card cash withdrawals are specifically noted on your credit file and it is a bit of a red flag. What you want to do is get a card that lets you do a 'Money Transfer' - the money goes straight to your current account and you pay off the credit card as normal. There is a percentage fee charged for this usually and not many providers offer that combined with 0%.

The other thing you could do is just make all your day to day purchases on your credit card for a month or two which will leave you with a big wad of withdrawable cash in your current account. Then just pay off the credit card as you wish. Don't miss any minimum payments though as you'll lose the interest free deal.

https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards has some good advice regarding 0% purchase cards if you haven't already found it.

See also https://www.moneysavingexpert.com/loans/plastic-loans#moneytransfers for information regarding money transfers.

[Barker-CBR 600]

Hi all

10 year+ banker here (and before you bring the hate... I am not THAT type of banker) dispel a few myths


- Cash withdrawal on credit card has zero effect on credit rating. Only things relating to credit card that affect credit rating are balances, overall limit and making payments on time. I.e payment all on time is good but if missed start to hurt and any arrangements or defaults are very bad,. Balance only matters if deemed to be getting too high on one or many cards and same goes with limits. Money transfers don't appear on credit files with any major credit file provider (Equifax and Experian). What they do affect is your profile with the finance company/bank providing the card. As kraggem suggested they are 'red flags' but only as far as that bank is concerned and it's own internal profiling of you. Some simply do not care. Remember credit ratings are almost exclusively automatic in low end personal finance

- wide range of credit cards offer 0% on purchases but VERY few (if any) offer it on cash withdrawals. And there are normally stipulations such as fees, or daily limits or very short periods

- 0% purchases do not equal cash withdrawals or money transfer so check the different rates and you'll usually find minimum 3% on money transfer even on a 0% card


So in a situation you have a 0% purchase credit card you won't be buying from a private seller with it. Unless as secret mole suggests you pay with PayPal then pay that bill with credit card but check to make sure doesn't count as a money transfer.


Put it simply: my advice would be

Buying a bike privately (in order of lowest cost) = use savings, a loan or bike finance company

Buying through dealer = above applies or use a 0% purchasing credit card (but dealer may charge you 2% fee for this as that'll be around what their processing cost is from merchant terminal) and pay it off before the offer expires - or move to a 0% balance transfer card but accept this will cost you 3% in a one off fee.
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Previous - Gilera DNA50 / XVS125 Dragstar/Honda CBR 600F/GSF 650 Bandit
Current - 2013 Suzuki VZ800 Intruder
'Is this a rhetorical question?'

[Freddyfruitba...]

[Barker-CBR 600]

Hopefully a banker without the w....

No hedge funds and million pound bonuses for me - small businesses (including a fair few bike dealerships actually!) so hopefully can help on this sort of thing!

Update -

OP should be able to if his credit limit high enough - often limited to 75-95% of limit on cash withdrawal. Might have to split across several days as well as some (not all) have £300 daily cash limits.

It's definitely possible just whether or not the fees are worth it is a question. I'd be surprised if it didn't even out at a 3% cash fee and then 3% for the balance transfer so 6% cost. That'll work out to roughly what a relatively short term loan would cost (given loan is reducing balance its not as simple as '2 years at 3% on a loan = the 6% in fees on cards'. Plus you won't likely get 3% as a rate on a 2.5k loan).


Also just check the small print on balance transfer card as some don't allow balance transfer of cash withdrawals (I have never looked into whether that was controlled by one side or the other though).


Possible but I wouldn't recommend it - but it's OPs choice and do what you gotta do!
____________________
Previous - Gilera DNA50 / XVS125 Dragstar/Honda CBR 600F/GSF 650 Bandit
Current - 2013 Suzuki VZ800 Intruder
'Is this a rhetorical question?'

[Barker-CBR 600]

Out of interest I'm not selling credit cards or anything...

There seems to be a Tesco one which is 0% moneytransfer for 40 months but with 3.94% fee.

Pic attached


Long as you paid that off within 40 months would month cost the 3.94%
____________________
Previous - Gilera DNA50 / XVS125 Dragstar/Honda CBR 600F/GSF 650 Bandit
Current - 2013 Suzuki VZ800 Intruder
'Is this a rhetorical question?'

[iooi]

[iooi]

[Northern Monkey]

Virgin offer a money transfer card. 32 month insterest free with a 1.7% fee. They'll give you up to 15k. Takes about 3 days for the cash to be in your bank account
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Fisty: after polishing the tank with the glistenng beads of sweat from my full hot scrotum, I filled the headrace bearings with 10cc of my manmilk

[kgm]

The Virgin money transfer card seems to be the best option. Again, see the links in posted earlier.

[thehairysmite...]

Thanks for the tips. The PayPal route is interesting, might have to contact a few of the credit card companies to see how they would classify that transaction. As for the balance transfer route, it does seem a little too much effort for the amount of money it might save.

[secretagentmo...]

[Freddyfruitba...]

[Barker-CBR 600]

[el_oso]

I took out 10k on the virgin transfer credit card. Used 4k to buy a car and put the rest in a (pitiful) savings account. Not planning to have any other reasons to get credit out, so it's still free money even if it is a hundred squid or so per year.
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Car: Jeep Wrangler 4.0L

[thehairysmite...]

From what I can tell it really depends on how much your borrowing, your credit rating etc. I think simplest option for me is to follow el_oso's advice and get a money transfer card - 25 months interest free with flat 2% transfer. Virgin seem to be pushing these cards heavily at the minute.

As for the thread being off topic, I can hardly think of a heading that would suit it much better, it falls within the description. If your not interested stop reading it!

[Marclev]

[naetype]

[Barker-CBR 600]

[naetype]

The information on limits, breaches of, cash advances etc. on credit cards is shared by all users of the credit rating companies that the card company subscribe to and is not internal to the existing credit card provider who the customer is using for the cash advance. Which is the whole reason for the existence for credit 'rating' agencies - they share that information with their business customers to make risk assessments and decisions based on what risk profile they're prepared to accept for new and existing customers.

So in all likelihood getting a cash advance will, to a greater or lesser extent, affect your ability in some way to gain advantageous terms or even credit in the future. Even Wonga use internal risk scoring to adjust the APR of their cash advances based on the information provided by the agencies. As they do care and that will be why they have the exorbitant interest rates they charge. If you're happy with that then batter that ATM with your CC.

Otherwise for the sane, 0% APR well before using your CC for cash advances, particularly at the amount mentioned.