trying to get my head round something..

kelspicknell

i've just tried to work out if i can stooze on my virgin card and manage to pay it off - i would be grateful if someone could just clarify what i want to do will work!

virgin card

£2500 owed
£10000 available to spend

min. payment now is £43
min. payment on £12500 is £343 (3%)
bt fee 2.98%

i wasn't sure on tax rates so left it at basic 20%

if i put the 10k in savings account of 6% then over the 6mths i have left on my 0% on balance transfers i should be -£81

and so my card will be paid off whilst using the interest from the amount available, yes?

i've used the calc over at stoozing.com

(it doesn't help being pregnant at the moment as my brain is a bit mushy!! )

JimmyTheWig

Two things...
1. 6 months interest at 6% annual interest means you will get about 3% back in interest. This is basically the same as your balance transfer fee. So you're not really going to make any money. Plus you may have to pay tax on your interest which means it would cost you much more than you get back.

Ah, that's what the calculator is telling you. The minus means that you would be _losing_ £81 if you do this.

2. Also, this would be a whole lot worse if your £2500 balance isn't a 0% balance transfer as you would be paying interest on this.


Basically, with 6 months interest free and a 3% fee you can't make any money.

YorkshireBoy

kelspicknell wrote: »

min. payment now is £43

So you have interest bearing debt on the card? Stoozing the rest is a non-starter because this pre-existing debt will continue to attract interest.

min. payment on £12500 is £343 (3%)

Not that it makes any difference (you'll still lose money), but the minimum payment wouldn't increase. It'd still be the greater of £25 or 'interest + £5'...meaning it would stay at it's current level of £43.

kelspicknell

the 2500 debt has got interest on it, but if my min payment at the moment is about £43 that includes the interest on that.

my goal is to pay off this cc, not to make a profit. if i can pay it off without spending the money in my pocket then that is an added bonus for me.
if i come out minus £81 then that's ok.

i've still got 0% bt on the remaining 10k available

YorkshireBoy

I think you need to read up on, and understand, the 'order of payments' on your card.

If you SBT £10,000 to your current account and then repay £2.5K off your card, this £2.5K repayment will be applied to the 0% SBT you've just done...NOT to the interest bearing element of the balance.

Apologies if I've misunderstood?

Any

Hi,
I see what are you doing. But it will never work.
you will only be able to transfer £9700 - because they will add the transfer fee of £289.06 to this on your c/card statement. So after the transfer you will have:
Balance on card 9700+289.06fee+existing2500=12489.06
Amount in saving account: 9700
Interest made in 6mths: 291 (before tax deduction).

So you won't pay anything at all "off". Unless you are doing this clearly for the 6 months "break" from having to pay it out of your purse - you will pay the debt for 6 months out off "SBT"?

JimmyTheWig

The short answer is no, don't do it. You have nothing to gain from this balance transfer.

kelspicknell wrote: »

my goal is to pay off this cc, not to make a profit. if i can pay it off without spending the money in my pocket then that is an added bonus for me.

If you want a longer answer as to why what you are planning won't work, then please let us know exactly what you are planning.


Your best bet would be to apply for a new 0% balance transfer card and transfer your interest-bearing balance on to this new card.

kelspicknell

thanks guys for all your replies - i think i'm even more confused now!!

i thought i'd best ask first before moving monies etc.

i'm basically trying to pay off my credit card. even if i transfer the balance to a 0% bt one it will still take ages to pay off (although quicker than non0% one)