I need the help of an expert...

phil7445

...or at least someone good at maths!

Is it still possible to make money from stoozing now that they charge a fee?

I am in the lucky position to have zero debt except for my mortgage.

Those lovely people at MBNA have today sent me some credit card cheques with "0% on the attached credit card cheques and all new balance transfers until July 2009. Handling fees apply*"

The * says in small print at the bottom "a handling fee of 3%"

So am I able to make much money on this and if so what and where do you recommend? My credit limit is a scary £16,500 but I don't think I should risk that much! I don't have much money at the end of the month so if I was to do a large amount, I might have to dip into that each month to pay back the minimum amount.

Thanks for reading this and any advice given.

YorkshireBoy

"July" is 9 or (nearly) 10 months away, depending on your statement date (when MBNA offers run to). If your statement date falls early in the month, move it back!

This calculator will show your profit...www.stoozing.com/calc.htm (subtract a month from whatever duration you use to allow for start up/shutdown delays), but you should be able to make between £132 and £600 depending on your (or your spouse's) tax status and your ability to negotiate on the BT fee. And if one of you is a non tax payer, or you have an offset mortgage, then there could be £750 or more(!) profit on your current limit.

What I'd do...

1. Clear any balance on the card.
2. Ring their retentions team (0800 783 1116) and negotiate a credit limit increase.
3. Negotiate a BT fee waiving/capping/reduction (in that order).
4. Transfer 95% of your limit to your current account (and onwards to your savings account).

First minimum payment is around 3% of balance (around £470 so hold this back if you want). 2nd and subsequent payments are around £25 so shouldn't be too much of a problem to meet from income?

Good luck!

phil7445

I tried the calculator and it came back saying -£14.25 :-s Have I done it wrong?

I put

Balance to be transferred - £10000
BT interest rate - 0
intro period - 8 months
BT fee - 3%
Max fee - left blank
Min payment - 3% (I think this is right not sure)
Savings interest rate - 6% (aprox)
Basic tax - 20%

Clariman

Hi Phil,

Your calculations are correct based on what you entered into the calculator. The notes below explain the differences in your and Yorkshireboy's numbers.

Firstly, why restrict yourself to £10,000 when your credit limit (and MBNA) will let you transfer £15,675. Also the minimum payments for MBNA is (keeping it simple) £25 per month, not 3% of outstanding balance. So you need to select the Fixed payment type on the calculator and enter 25 in the Min Monthly payment amount field. Being realistic, you should be able to squeeze 9 months out of it. Taking all the above into account, then the profit would be £86.38 for a basic rate tax payer.

That still doesn't explain the higher numbers in YB's post. The key is in his item 3 in his post

3. Negotiate a BT fee waiving/capping/reduction (in that order).

If you can get MBNA to waive the BT fee, then the profit would be £556.63. If you can negotiate a capped fee of say £75, you'd make £481.63.

On top of that if your wife is a non-taxpayer, then the figures would be higher. Finally, you can get a savings account with a better rate than 6%.

Hope that helps
Clariman

phil7445

Oh I see. I guess I was being lazy and guessing rates / numbers etc. Thanks for making it clear. I will look into it further.

YorkshireBoy

To put some meat on my earlier post...

Balance to be transferred (£)............................................£15,675
BT card interest rate (%) .................................................0%
Introductory period (months).............................................9
Balance Transfer Fee (%) .................................................3
Maximum BT Fee (£).........................................................
Minimum monthly payment type Percentage Fixed Amount.......Fixed
Min monthly payment amount (% or £)................................£25
Savings interest rate AER (%)............................................6.5%
Select Tax Rate..............................................................Basic (20%)

Answer: £132.40


Balance to be transferred (£)............................................£15,675
BT card interest rate (%) .................................................0%
Introductory period (months).............................................9
Balance Transfer Fee (%) .................................................0
Maximum BT Fee (£).........................................................
Minimum monthly payment type Percentage Fixed Amount.......Fixed
Min monthly payment amount (% or £)................................£25
Savings interest rate AER (%)............................................6.5%
Select Tax Rate..............................................................Basic (20%)

Answer: £602.65


Balance to be transferred (£)............................................£15,675
BT card interest rate (%) .................................................0%
Introductory period (months).............................................9
Balance Transfer Fee (%) .................................................0
Maximum BT Fee (£).........................................................
Minimum monthly payment type Percentage Fixed Amount.......Fixed
Min monthly payment amount (% or £)................................£25
Savings interest rate AER (%)............................................6.5%
Select Tax Rate..............................................................Not taxed

Answer: £753.32


And don't forget you can fix at 7% for 6 months at the moment with Halifax, meaning you might be able to average 6.8% or so over the 9 month duration.

phil7445

Thanks for making it clearer Yorkshireboy.