One account & interest free c/c

jo_jo70

Hi guys,

I would appreciate your help/advice as I know there is a wealth of experience on this forum. I currently have a £72k mortgage and would really like to make my money work a bit harder to try and reduce it. Have to admit I was always much better at English than Maths, so am just kind of going round in circles at the moment! I don’t have any outstanding loans/credit, my mortgage is my only debt, I have three credit cards and hardly use them, but if I do, I may off the whole amount straight away.

My mortgage is a One account, I have had it for about 3 years and am able to leave about £75 extra in it each month to help bring it down a bit quicker. Egg has just offered me interest free credit on any balance transfers until March 09 and I have a credit limit of £10k with them, all of which is available. So, my question is do I transfer cash from my One account to the Egg card (2.5% fee payable) and if so, which do I throw the extra cash at? My mortgage or the cash I’ve moved on interest free to Egg? I’ve recently done a budget and am really focused and paying off my mortgage early and with a few tweaks (and advice from here) have worked out I can comfortably save £150 a month.

Am sorry if I sound a bit thick about this and I’m sure it’s really obvious question, but I’ve never really moved money around, so want to make sure that I make it work the best way possible. Oh and I have already marked in my diary next year when the interest free credit is finished and to move the money back!

Thanks in advance
Jo

evab_2

HI, I'm a bit confused as to what you are proposing - do you want to transfer the £10k to egg and pay that off? Does the interest free credit run out in March 09 or is it for the life of the balance transfer? Also how much will the transfer fee cost you as opposed to the interest you would normally pay for the one account?

I don't know much about the one account (there are loads here that do and should help you better) but I thought it was better to have money in savings to bring down the interest on the mortgage?

Sorry not much info but someone else can give you better information. Ev

sdooley

You should pay down your mortgage as each pound paid reduces your interest immediately. But are you sure the one account will allow you to transfer back the £10K at the end of the credit card 0% period.

bunking_off

What you're talking about is called "stoozing"...do a search on these forums for more details. Balance transfer from your One Account Visa to the Egg Card, week after you do it the positive balance on the Visa will be swept into your main One Account. You'll be saving approx 7/12 of 6.6% interest on your One Account, at the expense of the 2.5% fee.

Any spare money, continue to pay down your One Account. When you get to March, repay your Egg Card from your One Account before the interest kicks in. (This isn't an issue with the One Account...by definition you'll have sufficient facility available unless you've gone spending mad in the meantime)

Notes:

1) Never, ever, spend anything on the Egg Card between now and March. If you do, any payments you make will pay off your transfer first, leaving the purchase accruing interest immediately.

2) Don't miss the minimum payment, whatever you do (worst case situation the 0% gets withdrawn as a result, even though you'll have paid the 2.5% BT fee).

3) Be careful about the dates you need to repay the lot prior to interest rates applying. Don't assume it aligns with the dates of your statements.

4) You can benefit, but be aware that the minimum payments you're making effect it. Can't remember what Egg card's minimum repayment is, but if it was, say, 2.5%, then after a month you'd only be getting 0% on 97.5% of the amount you BT'd, after 2 months 97.5% of 97.5% etc. On a 7 month BT like the one you're doing it isn't that material...on longer ones e.g. 12 months (or even 18) it can be significant.

Hope this helps. I used to stooze a lot but nowadays just have a long term / life of balance transfer with M&S (3.9% life of balance...those were the days...)

jo_jo70

Hi guys,

thanks for the advice/posts.

Bunking_off extra thanks to you - that's helped me loads and am off to do a search on stoozing!

cheers
Jo

getmore4less

I think you can still do this.

With the Egg card you can transfer directly into the One account and bypass the One Visa. monthly min payment from One account to Egg and then make sure that the final payment to pay off the Egg happens in time

DO NOT use the Egg for any other transactions.

the 2.5% fee over 7 month is probably around 4.5-5% so saving a bit for the trouble.

bunking_off

I prefer to look at these things from the other angle. If your interest rate is 6.6.%, then 7 months' worth of that is approx 3.8%. So 3.8% saving for 2.5% cost (this ignores the impact of minimum payments).

I think getmore4less is right that for Egg you can BT direct to the OA...for every other deal the OA Visa comes in handy though.

If you look at Martin's article there are some cards about which give you 0% for >12 months...these yield higher savings.

getmore4less

Forgot to say the place to learn about stoozing is from the creators of the term.

http://www.stoozing.com/

One you get this first deal done start to look for others, Lifetime low rates can be just as atractive as 0% with fees, and don't forget the 0% purchase cards which tend not to have fees.

Aim to have the mortgage 100% offset and keep it that way.