0% or low Life of Loan BT Credit Card?

treacle123_2

Hi, I'm new to posting, although not to the site as I use the advice regularly to reduce my outgoings.

I have a 0% balance transfer credit card due to finish in the next month. I cannot pay it off in full and want to reduce the interest I'm going to be paying which has risen from 19% to a staggering 34% over the last year - no idea why except that I pay off in full usually so I'm not making them any money! In doing this I can pay more than the minimum each month and get rid of it more quickly!

I have an excellent credit rating, never missed payments, no CCJ's etc, but dont want to 'waste' my credit checks by applying for the wrong card.

My question is do I go for a 0% balance transfer card or a low 'life of loan' one? Which is likely to give me a higher credit limit?

Any advice would be very welcome.

sferguson91

Depends on how you feel,

Both are similar to an extent.

If it's a 0%, I applied recently to virgin and got accepted and a healthy limit even though i'm a heavy stoozer and have multiple cards. Please remember if you have a partner, put them on as a second cardholder as it increases your chances of being accepted as well as a higher credit limit. It is also £25 a month minimum paymeny (wow)

Beware in 16 months you may struggle to get a good deal, so that is a potential downside. (although i've never had much probs)

With life of balance cards you have a fixed fee for the duration, which is usually around double the 1st option but you don't have to continually change each year.

It's really up to you, whether you wish lower payments to the bank with an element of risk or whether you want the security of paying the same each month. Personally I always take the first option.

As a closing statement though, make sure you set up a DD and NEVER spend on the card.

Hope this helps.

treacle123_2

Thanks for that - I can't go with Virgin as I've already got an MBNA card, but I might give the Tesco 0% for 13months a try and I'll add my other half as you suggest.

I normally go with the 0% ones, just all the negativity on the news putting me off!

JimmyTheWig

I believe there are more 0% deals out there than decent life of balance deals at the moment, so 0% might give you a bit more flexibility.

I would say it depends on how quickly you can pay the debt off. I know this is obvious, but it is worth stating. Interest rates are percentages. That means the amount you pay depends on the amount you owe at any given point in time.
So if you can pay this debt off in, say, 18 months time go for a 0% deal like the Virgin one suggested above. With 0% for 16 months you can clear the majority of your balance, leaving a small balance to pay interest on if need-be.
If, on the other hand, it is going to take, say, 5 years to pay off then you might be better off with a low life of balance card. Here there is no point on getting 0% for a year and then being left with a high rate (if, for example, you can't get another deal) for the next four years.

So, if you want some number crunching done... How much do you owe and how much can you pay off each month?

sferguson91

Hi there,

Just to let you know you can have up to 10 cards under MBNA (mental innit?)

treacle123_2

Thanks JimmyTheWig - paying off the amount isnt a problem as I've got a lump sum coming in 4mths which will easily cover it, I just want to pay as small amount of interest meanwhile as possible. I know the 0% will be best for that, just wondered if a low life of loan one would offer me a higher credit limit to save me applying for a couple of 0%'ers which will hit my credit rating somewhat.

Thanks also SFerguson91 - 10 cards!!!!!!!!!! Bonkers!!!

sferguson91

Dount you would potentially get more depending on which card you chose.

Remember everyone, don't spend on a BT card as it usually doesn't last as long as the BT rate does!

JimmyTheWig

treacle123 wrote: »

paying off the amount isnt a problem as I've got a lump sum coming in 4mths which will easily cover it, I just want to pay as small amount of interest meanwhile as possible.

Hmm, do you know anyone (e.g. parents) who could lend you the money for that time? I presume that the lump sum is guaranteed and so there wouldn't be any risk in them lending you the money.
The reason I suggest this is that paying a 3% transfer fee for only 4 months borrowing is something like 9% APR. While not terrible (and much better than leaving the balance on your existing card), no-one is going to be getting that sort of return on their savings.

Alternatively, you need to be looking at deals with low transfer fees. You could try Abbey Zero, for example. 0% interest for 6 months with no transfer fee. See http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards#best or have a look at http://www.stoozing.com/0fees.php.

treacle123_2

Thanks for that - good point on the fee - I'll take a look at the no fee cards, otherwise I'll pop the lump sum in a high interest (ha ha) savings account and pay off the 0% when its run its course! At least that way I'd get some, if not all, the fee back - I'll have to do my sums and work out whats best.

Thanks again for the help

sferguson91

Abbey have stopped taking applications for their 6 months 0% over the internet, you can only apply for this via the branch.

JimmyTheWig

treacle123 wrote: »

otherwise I'll pop the lump sum in a high interest (ha ha) savings account and pay off the 0% when its run its course!

I'm glad you've said that. I was going to suggest it, but didn't want to confuse you.
A fee-free deal is still probably better, though.