Balance transfer Rate's

uknodnol

When choosing a card for balance transfer's what do you consider the best option for example:

e.g. Amex 4.9% for life of balance, or a shorter term 0% offer (MBNA) which may include a fee of up to 2%?

Milarky

Short term 0% offer e.g. MBNA 9 months

Of course it depends on your requirements, but 0% cards are preferable in the short term [i.e. assuming you could get 0% now and 4.9 L.O.B in 9 months time anyway].

If you are stoozing, 9 months with a fee may be preferable to 6 months without one - it depends on how much you put on the card really since the fee [at 2% capped at £50] is equivalent to fee fee borrowing above £2500. If you also assume that you can take a card for 6 months at 0% now and requalify for another 6 months at 0% card later then a higher credit limit on the card with a capped fee is the only determining factor I would say.

For instance, if the extra amount borrowed on the 9 months card is offset against the fee [of £50, as it is assumed capped and you have borrowed above the cap] then provided you make at least £50 in interest on that additional amount over 9 months you are better off. With interest rates of 4% pa net - say 5% gross BRT - that would be 3% over 9 months. Thus if you can get a credit limit which is £1666 [say £2K plus] higher on a 9 month card than a six month card it would be slightly more profitable. But how do you know what the alternative card's credit limit would have been?

The other advantage of 9 months is having to apply less often of course.

uknodnol

Short term 0% offer e.g. MBNA 9 months

Thanks for you comprehensive answer. And of course you are correct, the choice of card depends on many factors which independently can bring various benefits. For example, extension of cash flow option for a short term investment/unlocking capitol wold benefit form the short term 0% offer, maybe with the extension to 9 months with fee. As you pointed out this would only generate £50 in fee's for a gain of freeing up cash. Secondly if you are not such a big player and don't have the expenditure to be able to pay back the full amount in the time frame then 0% may be best for an initial transfer from existing cards to give you a break in interest accumulation, I would then personally choose a lower 'for life of balance' offer.