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using credit card as loan

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    I just wanted some opinions, I switched colleges twice have just turned 19 and just finished first year of college after finally finding a good place to study, doing well so should hopefully be going to uni September 2013. I currently need £1000 for something undisclosed, I have a family member who will lend me this £1000 next June, but I need it now. I have recently got a weekend job earning around £140 a month, I have also got a credit card at 19.5%. I was wondering if it would a be a reasonable idea put this £1000 on the credit card, I can pay back £40 a month, basically:

    Base: £1000
    interest = £195
    Repayments for 12 months = £480

    so am I right in saying that after a year the debt will be £715 I will pay this off with the £1000 from family member so will get back £285 (covering the monthly payments I made minus the intrest), so the loan has cost me overall just £195 which is fully justified as getting the £1000 early is easily that important, also the card will not be used for any other purchases as it will be given to a family member for safe keeping.

    I just wanted to check if I understand this all correctly, or if there are any better financial ideas to get £1000 a year early that costs less than £195 for the year.

    thanks J

    p.s please don't post with any life advice e.g don't spend money you haven't got or just wait for one year for the money. that's not what this post is about
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    Have you checked to see what the minimum payment is? I should imagine it would be quite a bit lower than £40 but it's worth checking.
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    If you really need the money now then that sounds reasonable to me, phone up your credit card company and run things through to be sure? It might be a good idea to get it confirmed that nothing will come round to bite you on the behind and if you can say you spoke to x person on x day at x time to confirm that you had it all understood they'll be able to chase it up if any wires get crossed or something goes wrong.
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    Its Amex, so is 2% of balance or £25, although paying more means I have more money left over from the £1000 I receive next year, although I think i see what you mean, it wouldn't affect the cost of interest if I paid the minimum.

    and yep ringing up sounds like a good idea to just check things over.
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    (Original post by flare z)
    Its Amex, so is 2% of balance or £25, although paying more means I have more money left over from the £1000 I receive next year, although I think i see what you mean, it wouldn't affect the cost of interest if I paid the minimum.

    and yep ringing up sounds like a good idea to just check things over.
    Just saying and all but if youve qualified for an Amex card you'll be on a high income regardless so you shouldnt be needing to use it like that? May i ask which card it is though as some of their cards wont allow you to do this.
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    (Original post by flare z)
    it wouldn't affect the cost of interest if I paid the minimum.
    Yes it would as interest is calculated on the outstanding balance every month. The less you pay back, the more interest you will pay.
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    Not very clear what the money is for. If it's for living costs etc maybe you should consider taking a loan out from the government (not many people know of these).

    These are called "crisis loans" to help you meet living costs in the short term.

    http://www.direct.gov.uk/en/moneytax...me/dg_10018856

    Just thought I'd throw this in, as if you apply they are far better than commercial loans!
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    If you need the money, call your credit card company and run things without a doubt. It is great to confirm it whether they will be able to chase it up if any wires get intersected.

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