ive just finished reading this article and one of our biggest probs is we have intentions to put aside extra payments each month for personal debt, and we do, but not the amount that we would like to. so after reading this article id like to get a credit card and put all income onto personal debt. then use the unlimited free redraw facility i already have to then pay the credit card off each month. this way id pay off the debt quicker.
we dont have too much personal debt as we only have a debit card – not a credit card. it's just that we still owe $49,000 on our car, and i want to slam that debt in 2 to 3 years. our PPOR is a rental supplied by my husbands work so no mortgage for PPOR. our investment prop debt is $369k but im not worried about that at the moment.
so can anyone point the way to where i can get a fee-free credit card which is interest free for a month or so? im going to shop around online now, but i may miss a good deal that someone here knows about
thanks!
ive just found a Westpac one.
no annual fee for the first year – $30 after that.
free additional cardholder.
55 days interest free
interest rate not competitive but we will be paying it all off before it gets charged – Interest rate: 17.74% pa for purchases, 19.99% pa for cash advancesthis is the bit i found interesting: "0% p.a. on purchases for the first 5 months from when your account is opened (special promotion for a limited time)*" http://www.westpac.com.au/internet/publish.nsf/Content/PBCCCSCR+55+Day+Visa+and+MasterCard
so I guess this means that we would be able to live off our credit card for 5 months and put basically all 5 months living expenses on our credit card, therefore minimising our interest paid on our car loan. then redraw at the end of 5 months to pay it off. our household budget is around $3000 a month depending on which month of the year it is – so I guess it depends on if the card limit was $15,000. ill call tomorrow and find out.
at the end of the 5 months shop around again to see if we would get a better deal elsewhere. if so we just change credit card providers.
any thoughts on this plan would be appreciated
in the meantime ill keep researching.Hi Karen
You could be making a big mess if you are withdrawing from your investment loan to pay private expenses. A way better way would be to use a 100% offset account.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
nah my personal loan of $50k. thats my main concern at the moment.
Hi just so I understand, is it legal to get a credit card and move 10k for instance into a LOC to reduce interest?
(moving back to credit card before repayment is due of course)What about a line of credit loan against any possible existing equity in the investment loan up to 80% LVR.
What you need to consider is the interest cost of the personal loan against a line of credit loan probably at housing interest rates.
Say 12% on a personal loan as compared to 5% to 6% on a line of credit loan.
say $115 on a personal loan as compared to $48 to $57 on a line of credit loan per week.Daniel – I think you might mean the below mentioned method..
What you are possibly referring to thinking of is an offset account that your wage and rent income goes into and you pay your bills from the credit card and pay off the credit card before the interest free period runs out. This offset then reduces your home loan interest charge.or are you thinking about the transferring of one credit card to another credit card that some other bank offers . Unfortunately this is only offered to credit rather than cash advances. This is the catch with your idea in that cash advances do not have the interest free period and interest is usually charged straight away from day one.
Another thing to consider is it worth while spending 49,000 on a car that is going to be worth a lot less in five years time.
Daniel W wrote:Hi just so I understand, is it legal to get a credit card and move 10k for instance into a LOC to reduce interest?
(moving back to credit card before repayment is due of course)Its legal, but wouldn't work practically. Banks charge interest from day 1 for cash withdrawals. So you would be paying 20% to receive a 5% deduction!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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