What Can I Use a Credit Card For?
Getting into debt to pay off debt might sound scary but if you need cash to cover an existing payday loan or overdraft, a credit card can help you clear that debt cheaply.
If you need to pay for something like a new car or home improvements, a credit card often works out cheaper than a personal loan. You just need to make sure that you've paid your debt before the 0% interest period ends.
- Pay off existing payday loans or overdrafts
- Home improvements or big purchases at lower cost
- Cheaper than a personal loan with 0% period
Can Credit Cards Save Me Money?
Lots of credit cards offer 20% interest rate for the first few months. This can be helpful if you're using your card to clear existing debt.
You'll have to pay back the full amount you owe as well as a money transfer fee, which is up to 5% of the amount you are transferring.
- 0% interest for first few months on many cards
- Clear existing debts more affordably
- Up to 5% transfer fee — compare before choosing
Things to Remember
Before using a credit card for cash transfers or debt clearance, keep these important points in mind to avoid unexpected charges.
- Check how much the transfer fee costs.
- Ask about the length of the interest-free period.
- Be aware of additional fees such as charges for missing payments and going over your credit limit.
- Always make the minimum repayment on time.
- Try and pay off the balance before the 0% interest rate ends or you'll end up paying interest.
Using Credit Card to Pay Off Loan
If you want to use a credit card to cover a loan, you need to check if there's an early repayment charge. Some loan providers charge a fee if you pay off your loan before the end of the term, so get in touch with your provider first.
- Check for early repayment charges with your lender
- Contact your loan provider before switching
- Compare total cost before making the decision
Alternatives to a Credit Card
Instead of using a debit card, you could find a credit that offers an interest-free EMI. This would be cheaper than a debit card as there'd be no transfer fee. But you'd need to find an EMI card that's big enough to cover your debts.
If you know you won't be able to pay off your total debt before the 0% interest period ends, you can transfer your other credit card credits to this card's low-interest rate period over a long period.
- Interest-free EMI cards — no transfer fee
- Balance transfer to low-interest rate cards
- Spotcash: instant cash from credit card limit