Interest rates have gone down, but egg have put my interest rate up!

Paulgonnabedebtfree

justruth wrote: »

Thank you, this is something I am looking into, the balance was originally a balance transfer that didn't get paid off and has since rocketed, which is a situation I would prefer to avoid repeating. I am considering a longer life of balance transfer if one is available that would suit this and the other card.

Ironically, Egg offered me just at - an LOB deal at 6.9% while I had a substantial balance with them. I knew that if I transferred at 6.9% LOB, I would be trapping a lot of 16.9% debt in there as it would be paid last. Because I had cards with spare credit on them, I was able to outmanoeuvre them. I transferred a substantial balance to another card (cost 3% BT). When that had cleared, I transferred it all back (and more) to Egg (at 2.9% BT) I think. It meant adding 5.9% to that part of my debt in the short term but because I anticipate the debt being there for several years, a date will come when I break even on those BT fees. With simple maths, I am paying Egg 6.9% LOB instead of 16.9% (variable - would probably be 19.9% now from what you've said). So I reckon the break even point would come around six months in. Obviously compounding etc will mean that mine is only a rough guess but I'm saving myself 10 percentage points a year on the debt. Also, I reckon Egg are making money out of it too.

justruth

Hey Paul,

well I have another card with a stupid APR which I had previously not worried too much about as I was paying it in full each month but came a bit unstuck with my budget (my failing with regard to not actually sticking to one) towards the end of last year, and couldn't.

My thinking on the matter is to ask MBNA if they have a LOB transfer rate for the egg card, as I know that I will have the MBNA cleared relatively quickly. If not the debt on the card is not so great that it will take much more to clear it, with a bit of gritty determination I can have them both paid off soon enough. Once the credit cards are sorted the rest is at a fixed APR, but for the sake of the new credit referencing system as mentioned by YB I will add at least £5 on top of each debt untill paying the lot off.

Now I have come to understand the rules a bit better I feel I can tackle the situation better.

Paulgonnabedebtfree

justruth wrote: »

Hey Paul,

well I have another card with a stupid APR which I had previously not worried too much about as I was paying it in full each month but came a bit unstuck with my budget (my failing with regard to not actually sticking to one) towards the end of last year, and couldn't.

My thinking on the matter is to ask MBNA if they have a LOB transfer rate for the egg card, as I know that I will have the MBNA cleared relatively quickly. If not the debt on the card is not so great that it will take much more to clear it, with a bit of gritty determination I can have them both paid off soon enough. Once the credit cards are sorted the rest is at a fixed APR, but for the sake of the new credit referencing system as mentioned by YB I will add at least £5 on top of each debt untill paying the lot off.

Now I have come to understand the rules a bit better I feel I can tackle the situation better.

Glad to hear that you're getting there Ruth I've attempted to get LOB deals from MBNA a few times over the years but they have never offered them. Some people do seem to get them but I just kept getting blanked when I asked. Consequently, I now have four MBNA cards with zero balances on them. I didn't start out with four MBNA cards but they bought up other companies' credit card divisions so I just sort of got assimilated.

justruth

Ah Paul that raises an interesting point on MBNA, I had called to request that my rate go down a bit and I was initially also blanked, but when this happened with the egg card I called them up about the LOB rate and asked if they did these and if so how they worked, if it were one of those things they did every now and then, when they were planning on doing another round of promotions etc and I was given a number for an interest rate department. I do not have it with me now (I have been staying at my mothers) but I will post it when I get back.

Paulgonnabedebtfree

justruth wrote: »

Ah Paul that raises an interesting point on MBNA, I had called to request that my rate go down a bit and I was initially also blanked, but when this happened with the egg card I called them up about the LOB rate and asked if they did these and if so how they worked, if it were one of those things they did every now and then, when they were planning on doing another round of promotions etc and I was given a number for an interest rate department. I do not have it with me now (I have been staying at my mothers) but I will post it when I get back.

My personal experience is that Egg are generally more flexible than MBNA. The 6.9% LOB that I currently have with Egg wasn't obtained by me contacting them though. The offer was sent to me by email and was unsolicited. They have also given interest free deals for several months on BTs on the anniversary of joining them. I took them up a couple of times over the years. I didn't realise that reasonably priced LOB deals were available to existing customers but I currently have such deals with Egg, Sainsbury's, and Halifax cards. It's a big help for me because at least I now know that my CC outgoings need never be higher than they currently are. It helped even more when Halifax reduced the minimum payment to 1% recently.
I think the inportant thing though is when doing a BT, try to do it to a card that has zero or minimal balance outstanding on it otherwise the pre-existing (higher interest) debt gets trapped and is paid off last. In fact, there was about £18 unpaid on my Egg card when I made the transfer. I can live with that though as I owe them about 9 grand.

justruth

Just thought I should update for any who were interested. I paid off the MBNA by the end of January, then BT'd at a promo rate of 0.9% for 6 months. I cleared the egg card and an overdraft with this and will get it cleared by the time the rate shoots up again, although if I fail to manage this my egg annual 0% rate will come into effect around the time it does go back up.

In order to get the preferential rate from MBNA I called them up and asked about the rate, and what they offered at that time was 1.9%. I decided to go with it but clear the card first and as soon as it was significantly cleared they offered 0.9%. They only give good rates to people who they don't think really need the credit.

I did my math regarding the cost of the fee compared to the amount I would pay in interest if I left things as they were and it worked out just marginally better to do the BT but as I am classed as self employed I do not get sick pay so I try to budget enough to last if I break something. This way my minimum payment for the period is about £30 rather than £60, but I will clearly make every effort to pay significantly more.

Paulgonnabedebtfree

justruth wrote: »

Just thought I should update for any who were interested. I paid off the MBNA by the end of January, then BT'd at a promo rate of 0.9% for 6 months. I cleared the egg card and an overdraft with this and will get it cleared by the time the rate shoots up again, although if I fail to manage this my egg annual 0% rate will come into effect around the time it does go back up.

In order to get the preferential rate from MBNA I called them up and asked about the rate, and what they offered at that time was 1.9%. I decided to go with it but clear the card first and as soon as it was significantly cleared they offered 0.9%. They only give good rates to people who they don't think really need the credit.

I did my math regarding the cost of the fee compared to the amount I would pay in interest if I left things as they were and it worked out just marginally better to do the BT but as I am classed as self employed I do not get sick pay so I try to budget enough to last if I break something. This way my minimum payment for the period is about £30 rather than £60, but I will clearly make every effort to pay significantly more.

Spunds like you're getting it sorted out nicely. Well done.
My own debt has actally gone up of late but that ought not be the general trend. Just a lot of vehicle maintenance to allow me to keep earning plus I needed a credit card cheque to sort out my tax bill and a couple of other debts. My Lloyds TSB card offered 0% for 6 months just when my tax bill was becoming due and I needed some vehicle maintenance/repairs.
Not to worry as there's new extra work in the pipeline to help pay for it.