Hello
Long time lurker first time poster here.
By way of background I have 23,000 outstanding on a loan I took out two years ago before I discovered MMM. Since discovering MMM I've repayed all of my debts save for this one.
This week I signed up for and was accepted for a money transfer credit card (i.e. one where they transfer cash to your bank account and place the balance on the credit card). Other than a 4% processing fee this balance will then remain at 0% for nearly three years.
The reason I took this offer was because the loan has a break fee of 20,500. If I transfer 20,500 from this card to my bank account and use it to break the loan I will save 2,500 in loan repayments for the cost of 820 giving a net saving of 1,682. Given my now mustachian ways I should be able to repay this 20,500 balance in around a year - well within the three years 0% period.
My dilema is though, that I've been accepted for the card with a credit limit of 31,000. Therefore I could get an additional 10,000 into my bank account (after paying off the loan) for a total cost of 400 for three years. As above, I should easily be able to repay this within the period.
Unfortunately given my recent debt repayments I have little to no money in my bank account at the moment although hopefully this will change in the coming months now I have nothing further to repay save this one debt.
The question is - is taking the additional 10,000 a good idea? On the one hand this would instantly give me a cash buffer of 10,000, would be very cheap debt (400 total cost for three years) and may hopefully save me money in the long term (e.g. by allowing me to buy a second hand car for cash when my current one breaks instead of financing a new one). On the other hand, if I don't do this I will have less total debt and will hopefully build a buffer over the coming months anyway.
Does anyone have any thoughts or advice for me?