Credit cards - can I do this?

HurdyGurdy

I have two credit cards. One with Capital One, and one with Aqua. Both, as I am sure you know, have horrific interest rates. Each card is very near to the credit limit. NYR = pay them off asap.

Both have written to me and offered me balance transfers at something like 14-15% (I haven't got their letters to hand at the moment to be precise) until June 2009.

I am doing my best to pay at least twice the minimum payment on each balance each month (sometimes I manage three times) as I obviously want these debts repaid asap.

Do you think I could get away with this:

Contact Capital One and ask if they will increase my credit limit by £1,000 in order for me to take advantage of the balance transfer deal they've offered me. Transfer the Aqua balance to Capital One.

And do the same with Aqua, and transfer the Capital One balance to Aqua, thereby swapping balances, but ending up paying less than half the interest I am paying now, for four months.

Or, contact Capital One and ask for the limit to be raised, and also ask Aqua the same. Then shuffle the money a bit, depending on which card organises it first (assuming they will), transferring, for example, all the Aqua balance to Capital One, and then transferring the entire amount back to Aqua, so that all the debt is in one place.

I hope that makes sense - it makes sense in my head.

(Both cards have been shredded, incidentally)

fatbelly

Hi HG

You know there is a credit cards board...

Anyway, this makes sense as long as there isn't a balance transfer fee or it's very small.

It's not as good as a 16-month 0% offer on a new card but maybe your credit rating isn't too hot. Have you applied for a new card recently?

Have you seen the list of current deals on

http://www.stoozing.com/0fees.php

justruth

I am guessing that you dont have great credit in order to take out a better deal with another provider. In order to make this work you would have to get both cards to play ball and increase the limits. Then what you have to do is work out the cost of BT1 with fee (usually around 3%?) then BT2 with fee again.

eg if both cards have a balance of £1000, then in order to take advantage of the offer you would cost £30 BT1 Making a total debt of £2030 on CC1 then BT2 would cost £60.90 making total debt £2090.90 (so basically adding on nearly £100 to make use of the BT rate. You would still have interest on the Fee at your normal rate and this would be paid off last.

I dont know how much you overpay by each month but if you are looking at this as a way forward, then I suggest you go play on the snowball calculator and work out if you actually save money once you add on the extra £100 for the shuffle.

HurdyGurdy

fatbelly wrote: »

Hi HG

You know there is a credit cards board...


http://www.stoozing.com/0fees.php

Thanks. Yes. But as this is part of my strategy of getting debt free, I thought the post was better directed here



Thank you for replying and offering advice. I haven't applied for any cards recently, no. I'm concerned at leaving credit check footprints behind as we are hoping to transfer back to a mainstream mortgage lender later this year.

HurdyGurdy

justruth wrote: »

I am guessing that you dont have great credit in order to take out a better deal with another provider. In order to make this work you would have to get both cards to play ball and increase the limits. Then what you have to do is work out the cost of BT1 with fee (usually around 3%?) then BT2 with fee again.

eg if both cards have a balance of £1000, then in order to take advantage of the offer you would cost £30 BT1 Making a total debt of £2030 on CC1 then BT2 would cost £60.90 making total debt £2090.90 (so basically adding on nearly £100 to make use of the BT rate. You would still have interest on the Fee at your normal rate and this would be paid off last.

I dont know how much you overpay by each month but if you are looking at this as a way forward, then I suggest you go play on the snowball calculator and work out if you actually save money once you add on the extra £100 for the shuffle.

You're right - I don't have good credit rating, and I don't want to be running around leaving footprints behind me while trying to find a better deal. The fixed rate mortgage (with a sub-prime lender) is due to finish in September this year, so we are desperately trying to repair our rating, or imrpove it as much as possible, to try and maximise our chances of returning to a mainstream lender.

I didn't know about the fee being paid last and at the normal rate - how sneaky is that!?

I will have a play around with the snowball thing and see how it pans out.

Thanks for replying and advising

fatbelly

We'll do what we can on dfw but the guys on the credit card board have the in-depth knowledge of what you can get away with on the different cards.