3.5 Year Personal Loan for 1.2% p/a - Free money 3.5 Year Personal Loan for 1.2% p/a - Free money
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  1. #1

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    Default 3.5 Year Personal Loan for 1.2% p/a - Free money

    Virgin Money launches the first-ever 40 MONTH 0% balance transfer credit card | Daily Mail Online

    Though I think my percentage rate is slightly wrong.

    Virgin do the first 0%, 40 month deal credit card. Virgin is interesting because for 4% they actually pay the cash into your bank account if you want as opposed to just a cash transfer (2.99%)

    You could speculate with this dirty cash loan. Borrow 15k and

    (1) Invest in the Stock Market at it's year low and wait for a 10% return every year
    (2) Put it on red at the casino and double it!
    (3) Stick it in a cash ISA fixed at 3% for the next 3.5 years (Make a return of 1200 quid for nothing at the end)
    (4) Stick it in Zopa and make a return of 2500 quid at the end for nothing.
    (5) Pay for all of your contracting expenses up front for the next 3.5 years and stick it on this years tax return, thus avoiding the changes to T&E in April.

    So many options. What would you do?
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    I think your numbers are broadly right. APR is calculated a bit differently than that. I could probably work it out more precisely with Excel, but can't be arsed. It won't be that far out from 1.2%.

    A few notes of caution though:-

    I doubt you would get an opening credit limit of 15K - probably £1-2K initially, which they would then promise "to review" after a couple of months (i.e. after the promotional rate is gone).

    Just making an application would leave a footprint on your credit file, which can have anything from a minor to moderate impact, depending on other searches. (*)

    Still on the subject of credit file, large amounts of credit card debt is viewed negatively, as it's generally considered you would only borrow such large amounts on credit cards as an absolute last resort - they can't tell it's on a promotional rate.

    However, cautions aside, I wouldn't completely discount it. My cc provider made a similar cash-transfer offer - shorter 0% period, but lower rate - worked out at roughly 1.5% APR - much cheaper than a short term loan. However, there was a gotcha (isn't there always) - any purchases during the same period would effectively be charged 17% interest, as payments were allocated to the 0% band first, so buying a TV for £500, but paying £1000 on the next statement would pay £1000 off the zero rate, not £500+£500, leaving interest on the £500 to accrue until the entire balance was cleared.

    (*) I know this for a fact, because I got a lot of loan quotes last year, trying to shop around, particularly as Barclays said "we will beat any quote" - but you had to get an actual quote for this. I believed the impact of credit searches was tiny, but on the second day of searching, the APR TREBLED as they spotted my previous searches on my file.

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    Quote Originally Posted by centurian View Post
    However, there was a gotcha (isn't there always) - any purchases during the same period would effectively be charged 17% interest, as payments were allocated to the 0% band first, so buying a TV for £500, but paying £1000 on the next statement would pay £1000 off the zero rate, not £500+£500, leaving interest on the £500 to accrue until the entire balance was cleared.
    I thought the credit rules had changed and the lenders had to apply repayments to the most expensive debts first (i.e those attracting 17% interest in this case).
    "If you are not confused, you are misinformed"

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    A link confirming highest rates paid off first:

    How Credit Card Payments Are Applied - UK Cards Association
    "If you are not confused, you are misinformed"

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    Quote Originally Posted by kyber View Post
    A link confirming highest rates paid off first:

    How Credit Card Payments Are Applied - UK Cards Association
    I got stung by this. Always have different cards. Transfer cards for holding balance transfers only, other cards (used to get cashback) for purchases. Don't mix transfers and purchases.

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    Quote Originally Posted by MarillionFan View Post
    Virgin Money launches the first-ever 40 MONTH 0% balance transfer credit card | Daily Mail Online

    Though I think my percentage rate is slightly wrong.

    Virgin do the first 0%, 40 month deal credit card. Virgin is interesting because for 4% they actually pay the cash into your bank account if you want as opposed to just a cash transfer (2.99%)

    You could speculate with this dirty cash loan. Borrow 15k and

    (1) Invest in the Stock Market at it's year low and wait for a 10% return every year
    (2) Put it on red at the casino and double it!
    (3) Stick it in a cash ISA fixed at 3% for the next 3.5 years (Make a return of 1200 quid for nothing at the end)
    (4) Stick it in Zopa and make a return of 2500 quid at the end for nothing.
    (5) Pay for all of your contracting expenses up front for the next 3.5 years and stick it on this years tax return, thus avoiding the changes to T&E in April.

    So many options. What would you do?
    (6) Slap it in the offset mortgage...

    I already do this with a Nationwide card they briefly advertised last year.

    The only beef I have with these is the amounts they are willing to lend. The Nationwide (and other cards in the past) looked brilliant but when the offer came through with both honest income replies and slightly artistic ones the actual amounts they offered were paltry. 2.5k I think was the most I got and apart from my mortgage and overdraft on current account I have no other means of credit.
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    Quote Originally Posted by kyber View Post
    I thought the credit rules had changed and the lenders had to apply repayments to the most expensive debts first (i.e those attracting 17% interest in this case).
    Funny, so did I - but the offer explicitly stated (buried in the smallprint at the very bottom) that any purchases would attract 17% interest until the total balance was paid off.

    This was a major cc company and the offer came through the post one month ago. So either they are flouting the rules, or have found a loophole.

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    Quote Originally Posted by MarillionFan View Post
    You could speculate with this dirty cash loan. Borrow 15k and
    REPENT DIRTY SPEKULANT!!!


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    Money Transfers | Barclaycard

    Quote Originally Posted by Barclaycard
    If you don’t pay your statement balance in full each month, we will apply the amount you do pay to reduce higher interest rate balances before your transferred promotional balance. If you have more than one promotional balance with the same interest rate, you’ll reduce the balance with the earliest expiry date first.

    Until you repay your transferred balance in full, you will incur interest on all your purchases at your standard purchase rate. This applies even if you repay your monthly spend in full each month. If you have any money left to repay on your transfer after the promotional period ends, interest will be charged at your standard purchase rate.
    That's the bit I remember reading, which seems to make it pretty clear - but then it does contradict the paragraph above.

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    Free money, LOL, from banks with love?

    The only free money in banks are the deposits kept by savers, free to the bank!

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