Credit Card question

[Niximus]

The company I work for is looking to move to the CBD and when that happens I would like to get a scooter to save on parking.

I'm not going to buy it outright and have been checking out my options.

I've noticed that most credit cards have lower interest rates than personal loans so I've been thinking about getting one and paying it off as if it were a loan. I'm 25 and I've never had a credit card before so I have some questions.

Balance transfers - Most cards have great deals for balance transfers - if I were to sign up with a card, buy the scooter and then sign up another card and transfer the balance to get the good rate - would this work?

If so, at the end of the 6 mths, could I do the same again?

 

[BeepTest]

You could probably do it but it would kill your credit rating after a few times making it harder to get loans in the future.

 

[Niximus]

You could probably do it but it would kill your credit rating after a few times making it harder to get loans in the future.

True that it would show a larger amount of potential debt. I found that out after I bought my house.

I had originally been pre-approved for an amount, went looking and took a fair while to find the right place and when I did it was slightly more than I had origanally applied for so I had to apply again. I didn't realise but it doesn't actually record that I didn't take up the first loan, just that I was approved. I was going to swap electricity provider when I moved but the company I was going to swap to told me I failed the credit check. I ordered a copy of my report and there were no defailts or late payments on it. The electricity place gave me the number of a place that is supposed to help you 'repair' your credit rating so I called them. They couldn't understand what the problem was as my record was clean and said that the only thing they could think of was that there were two large loans on there in the same year. It didn't seem to matter that I only actually took up one of them.

That said it only hangs around for a certain amount of time (I believe 4 years).

 

[BeepTest]

I think also that because you are transfering a credit debt to a lower interest rate CC it flags you as being possibly unable to pay off a debt at normal interest rate levels. Do it more then once and they will be very reluctant to lend you money.

 

[WCEforeverman]

Have you got any equity on you house?

 

[Niximus]

Have you got any equity on you house?

Yeah, bought just over a year ago. At the time I bought I had about 10% but since then I have made improvements to the place to a cost (to me) of around $15k so while the loan hasn't shrunk much in a year the value of the house has definitely increased. I'd estimate my equity to be around 15% at least.

 

[Niximus]

I think also that because you are transfering a credit debt to a lower interest rate CC it flags you as being possibly unable to pay off a debt at normal interest rate levels. Do it more then once and they will be very reluctant to lend you money.

Perhaps, but it doesn't appear to go into that much detail on the report that I have. It shows the bank and the amount of credit. It didn't mention the product (I could be swapping to that banks highest rate card). That was the troouble with the report. It wasn't detailed enough so it doesn't even differentiate between an approval and a loan.

It's nothing to do with me not being able to pay a higher rate. I just don't see the point if there are other options. The banks use every loophole they can to get money out of us - why make it eay?

 

[Lensen]

I think also that because you are transfering a credit debt to a lower interest rate CC it flags you as being possibly unable to pay off a debt at normal interest rate levels. Do it more then once and they will be very reluctant to lend you money.

Absolute rubbish, at least from a purely credit check perspective.

The only organisations that would know this level of detail would be the company you swapped your higher rate to a credit card with, and even then that's only if (a) you swapped within the same bank, or (b) you had to provide loan statements to get the credit card.

I've worked in lending for two separate banks for seven years and (a) has never even come up whilst looking at an application in any remote way, it's not in the credit policies or procedures at all. (b) would rarely happen and if you're having to provide loan statements to get a credit card of all things, your credit rating's probably already in the shitter.

 

[WCEforeverman]

That is another option aswell then. Taking out a seperate loan (using the equity in your house if you have enough) for the amount you need.

The credit card idea is ok, but unlike a loan the banks can pretty much change the terms whenever they want iirc (I think they have to give a months notice or something like that but it is not a great deal of time).

Also the attractive credit card rates don't usually last very long (6 to 12 months or so).

http://www.canstar.com.au/credit-cards/

There are also a few consumer websites that compare credit cards that you can check out if you want to go down that road.

 

[Niximus]

That is another option aswell then. Taking out a seperate loan (using the equity in your house if you have enough) for the amount you need.

The credit card idea is ok, but unlike a loan the banks can pretty much change the terms whenever they want (I think they have to give a months notice or something like that but it is not a great deal of time).

Also the attractive credit card rates don't usually last very long (6 to 12 months or so) and as BeepTest has said, jumping around from provider to provider can cause issues.

http://www.canstar.com.au/credit-cards/

There are also a few consumer websites that compare credit cards that you can check out if you want to go down that road.

Thanks, I have checked out the low rate ones and am aware they don't last very long. I would only be swapping once if I did it and only for a small amount- The scooter itself is only about $2,500 (a 49.5cc as I can ride that without a motorcycle licence in SA). My car loan is just about to expire too which is $80/wk so I thought that even though I have the cash on hand if I just kept paying the same amount for the scooter as I have been for the car I wouldn't even notice as I've been paying that money for a couple of years anyway.

If I put all the accessories I'll need on there too (helmet, wet weather gear etc) I'd say a card debt of around $3k. 6 months of $80/wk is $2,080 so on the 0% for 6 months plan I'd have around $900 to go at the end so though I could do a swap to another 6 month card and knock off the rest.

Another option is that I have been paying above my required repayments for my home loan and so have about 6 or 7 k in redraw if I want to use it but even that would be like taking a loan at 6. something percent that my home loan is.

 

[Leper]

If you can't afford a (motorised?) scooter buy a push bike. Simple.

 

[Niximus]

If you can't afford a (motorised?) scooter buy a push bike. Simple.

? I think you missed the point.

I have several sources of my own money I could use to buy it but in each case that money is better off staying where it is.

i.e. I have 6 or 7 thousand sitting in my redraw for my loan. I could take that money out and buy it but my loan is at 6 and a bit %.

Why would I do that when I can have the same amount of money on a card at <3% or even 0%?

 

[Lensen]

? I think you missed the point.

I have several sources of my own money I could use to buy it but in each case that money is better off staying where it is.

i.e. I have 6 or 7 thousand sitting in my redraw for my loan. I could take that money out and buy it but my loan is at 6 and a bit %.

Why would I do that when I can have the same amount of money on a card at <3% or even 0%?

Not entirely sure if this is relevant, but if you're in line for a cash discount on the scooter then you may not be able to get that with a credit card given the merchant fees involved.

Which means that it may work out better to get the redraw.

 

[Niximus]

Not entirely sure if this is relevant, but if you're in line for a cash discount on the scooter then you may not be able to get that with a credit card given the merchant fees involved.

Which means that it may work out better to get the redraw.

True, I haven't bought it yet so haven't even started to barter. Will have to see what I can do. Though it would need to be close to a couple of hundred off to make it worth it which is pushing a 10% discount.

That said, I'm not even sure if it's an appropriate purchase to barter. I did with my car and TV though. Has anyone here bartered for a scooter/motorbike?

 

[Leper]

? I think you missed the point.

I have several sources of my own money I could use to buy it but in each case that money is better off staying where it is.

i.e. I have 6 or 7 thousand sitting in my redraw for my loan. I could take that money out and buy it but my loan is at 6 and a bit %.

Why would I do that when I can have the same amount of money on a card at <3% or even 0%?

OK, fair enough. But as mentioned above, why not simply pay cash and negotiate a discount. 6% of (say) $5k is only $150 interest over the 6 months in which you might get "free" credit for - is that worth the hassle? Why not just "max" your credit card (by buying everything on it for a period of time) and then get one of those balance transfer deals.... if you can be bothered.

PS -
"Barter" = "I'll give you 6 pigs and 2 goats for your sister."
"Haggle" = "you want $60 for your sister, I'll offer $50."

 

[Niximus]

OK, fair enough. But as mentioned above, why not simply pay cash and negotiate a discount. 6% of (say) $5k is only $150 interest over the 6 months in which you might get "free" credit for - is that worth the hassle? Why not just "max" your credit card (by buying everything on it for a period of time) and then get one of those balance transfer deals.... if you can be bothered.

PS -
"Barter" = "I'll give you 6 pigs and 2 goats for your sister."
"Haggle" = "you want $60 for your sister, I'll offer $50."

It may work out better that way but that would depend on me getting a discount.

I just wanted to know other options if the discount offered is small or nothing.