Which balance transfer offer should I take!

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rich81
rich81 Posts: 15 Forumite
in Debt-free wannabe
Hi All,

I have quite a bit of CC debt that I am paying off. 2 of my card are about to revert to Standard rate as my promotional offer is ending. This means that I will be paying £119 interest per month (ouch). Good old Barclaycard have offered me two options...... 0% until April 2017 or 6.9% for the life of the balance. I would be able to transfer the entire £7300 across.

What would you do? 0% is appealing but I would then have to find another 0% next April. Would the 6.9% be a better option long term? This would cost me £42 per month interest ( based on starting balance) so I would still be saving around £75 per month.

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  • Sanctioned_Parts_List
    Sanctioned_Parts_List Posts: 491 Forumite
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    How much are you paying off this card each month?
  • rich81
    rich81 Posts: 15 Forumite
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    Sanctioned_Parts_List wrote: »
    How much are you paying off this card each month?

    Hi

    I can afford to pay £250. This means that I would have paid off £1750 by April, so would still owe £5500 ish when the interest rate shoots back up
  • Sanctioned_Parts_List
    Sanctioned_Parts_List Posts: 491 Forumite
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    Assuming Barclaycard's normal 1.9% transfer fee, that your standard rate is their 17.2% and not the higher sub-prime rate and that you never touch the card once you've set your payment up then:

    • If you take the 5.9% option, your debt will be cleared in roughly 33 months at £250/month, and you will have paid £605 in interest
    • If you take the 0% option and don't switch to another interest-free card when the introductory offer ends then your debt will be cleared in roughly 36 months, but you'll have paid £1168 in interest
    However, if you are disciplined and switch when each introductory offer ends, which will become increasingly possible when the debt goes down then you'll clear the debt in roughly 30 months, and pay not a bean in interest and only a few quid in transfer fees.


    Effort has its rewards.


    (Note these numbers came from fag-packet maths, so sorry if they're out by a few months).
  • rich81
    rich81 Posts: 15 Forumite
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    Sanctioned_Parts_List wrote: »
    Assuming Barclaycard's normal 1.9% transfer fee, that your standard rate is their 17.2% and not the higher sub-prime rate and that you never touch the card once you've set your payment up then:

    • If you take the 5.9% option, your debt will be cleared in roughly 33 months at £250/month, and you will have paid £605 in interest
    • If you take the 0% option and don't switch to another interest-free card when the introductory offer ends then your debt will be cleared in roughly 36 months, but you'll have paid £1168 in interest
    However, if you are disciplined and switch when each introductory offer ends, which will become increasingly possible when the debt goes down then you'll clear the debt in roughly 30 months, and pay not a bean in interest and only a few quid in transfer fees.


    Effort has its rewards.


    (Note these numbers came from fag-packet maths, so sorry if they're out by a few months).

    Thanks for this reply and for taking the time for crunching numbers for me :) I have other debts ( a lot of other debts!!!) so I am thinking to take the safe option at the moment and take the 6.9% offer and using any subsequent 0% offers for my other debts. I have around 40K to pay off in total.
  • Sanctioned_Parts_List
    Sanctioned_Parts_List Posts: 491 Forumite
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    Oh.

    Then perhaps rather than focusing on each debt in isolation you should post an SOA - template here: http://www.stoozing.com/calculator/soa.php

    There may well be a more efficient way of tackling it.
  • EssexHebridean
    EssexHebridean Posts: 21,372 Forumite
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    Agree with what Sanctioned said - you need to look at the picture as a whole, not just focus on one individual area.

    Have you looked at the eligibility calculator for 0% offers on the main MSE site to see how you stack up with chances of being able to get deals?
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00
    Balance as at 31/12/23 = £112,000.00
    SOA CALCULATOR (for DFW newbies): SOA Calculator
    she/her
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