can someone help me with the maths, please?

northern_star

I have 2,250 pounds (keyboard doesn't seem to have a working "pound' sign) on an Amazon credit card. The 0% interest is just ending. I have the money to cover this debt as follows; 1,800 in an current account paying 5% interest and 500 in a savings account paying 4.2% interest. I was simply going to pay off the 2,250 when the statement arrives (as I want to be free of cc debt and simply use a 'reward' type card for groceries/petrol which I intend to clear each month) but my bank are currently offering a 3.9% int on balance transfers for 6 months (I have an active card with them with a zero balance). Would it be better to take up their offer and transfer the 2,250 to this for 6 months and keep my money in the accounts as above? By that I mean would I earn more in interest by leaving my money where it is than I would pay in interest to the 3.9% card?

I know to be truly MSE I could rate tart it to another 0% but I don't want to go down that route and open another card besides I've now left it too late as the 0% on the Amazon finishes tomorrow.

Another option might be to transfer the 2,300 saved to my ISA (5.2%) and take up the 3.9% with the bank for the 6 months but then I'd need to withdraw it and lose part of this years ISA allowance.

Can anyone help with calculations or advice, please?

Paul_Herring

Close call really:

Current		Savings		ISA	
	5.0%		4.2%		5.2%	
20-Apr	1800		500		2300	
20-May	1800	£7.40	500	£1.73	2300	£9.83
20-Jun	1800	£7.64	500	£1.78	2300	£10.16
20-Jul	1800	£7.40	500	£1.73	2300	£9.83
20-Aug	1800	£7.64	500	£1.78	2300	£10.16
20-Sep	1800	£7.64	500	£1.78	2300	£10.16
20-Oct	1800	£7.40	500	£1.73	2300	£9.83
Gross		£45.12		£10.53		£59.97
Tax		£9.02		£2.11		n/a
Net		£36.10		£8.42		n/a

	CC-all		Pay using c/a	Pay using savings	
	3.9%		3.9%		3.9%	
20-Apr	2250		450		1750	
20-May	2250	£7.21	450	£1.44	1750	£5.61
20-Jun	2250	£7.45	450	£1.49	1750	£5.80
20-Jul	2250	£7.21	450	£1.44	1750	£5.61
20-Aug	2250	£7.45	450	£1.49	1750	£5.80
20-Sep	2250	£7.45	450	£1.49	1750	£5.80
20-Oct	2250	£7.21	450	£1.44	1750	£5.61
Gross		£43.98		£8.79		£34.23

Assumptions:
basic rate tax payer
deals start on 20th April
interest is not compounded
balances remain static

Summary, if you use current+savings to pay the card off, you'd lose £36.10+£8.42=£44.52 of interest
If you go for CC deal, you'll pay £43.98 in interest.

Difference of 54pence using the assumptions (some are unrealisitic I know)

fannyadams

Wow!
how did you do that?
Oh wait I see in your sig you are a programmer.
Is it as easy as it looks? (in M$ Excel)

northern_star

wow! thanks for that. Hardly seems worth the effort to move the debt in this case. I think i'll go with the option to pay it off outright and enjoy the feel-good factor that will bring. Thanks again.

Paul_Herring

fannyadams wrote:

Wow!
how did you do that?
Oh wait I see in your sig you are a programmer.
Is it as easy as it looks? (in M$ Excel)

Most of the calculations were (current month - previous month)/365*interest rate [hence the small variations]. Others were just sum(range) or gross*tax rate. I won't say if it's 'as easy as it looks' or not since I know some people have problems with this sort of calculation. Others have problems simply getting Excel to do what they want.