Do you know the cost of making a transfer from your credit card account to your current account?
One quick financing alternative available to you is to transfer the available balance on your credit card to the current account of the card holder. This service is frequently included with many credit cards, especially those marketed in shopping centres bearing their brand, which tend to be used to pay for everyday purchases.
Although this is one way to receive liquidity quickly (a certain drawdown limit is already authorised for each customer), with the added possibility of repaying it in –to quote their advertising– "comfortable", "flexible" or very small instalments, it is very important, as always, to think about whether or not it is advisable to have that money on the terms proposed before taking a decision.
This type of financing comes at a cost, so it is important that you bear in mind the following:
If you are drawing down this amount of money on credit and will pay or repay it in instalments, you will have to pay interest to the institution. The advertising for the card may mention that the transaction is "free", but this only indicates that no fee will be charged for the transfer service.
You therefore need to compare the interest rate offered on this type of financing from that institution and the various alternatives available, including traditional loans, from other institutions. Remember that the key words for working out the cost of the credit you receive are Annual Percentage Rate or APR, because in this way you can weigh up not only the interest, but also any fee you may have to pay.
In addition, if you agree to repay the credit in very small instalments, debt repayments will be very slow, which will also impact the total amount you have to pay. It is worth knowing when you will finish paying your debt and what the total out-of-pocket amount will be, as these details will undoubtedly help you calculate how much money it is really in your interest to receive at this time and what will be the best way to repay it.
Make sure you check out our simulator to calculate the total to be paid and the date of the last instalment for the various options you are considering.
You should also be aware of whether you can subsequently increase or reduce the amount of the instalments, if your circumstances change, and whether doing so incurs any cost, as well as what the cost would be of fully or partially repaying or settling in advance the outstanding debt.
Remember that your best defence is taking responsibility yourself, and that you are entitled to ask for an explanation of the terms of any credit so that you fully understand them and can take the right decision by pausing to think about your needs and resources now and in the future.