Should I Balance Transfer??

geordie_ben

I have £4901.11 on a Halifax Credit Card (£9000 limit) at 5.2% and I pay £500 a month off this and if all goes to plan this will be paid off by June 2010

I also have a Virgin Credit Card (£3000 limit) with a zero balance. Virgin are offering existing customers a promotion to balance transfer until June 2010 at 0% with a 5% handling fee.

Is it worth me doing?

Am I right in thinking its better to pay a one of 5% fee than pay 5.2% every month? Even if I cant transfer the full balance?

Would it be worth me trying to increase the limit on my Virgin Card first?

Any help would be great

dfh

Hi,
IT wont be 5.2 a month.I believe the monthly rate is 5.2 divided by 12.

Morn

geordie_ben wrote: »

I have £4901.11 on a Halifax Credit Card (£9000 limit) at 5.2% and I pay £500 a month off this and if all goes to plan this will be paid off by June 2010

I also have a Virgin Credit Card (£3000 limit) with a zero balance. Virgin are offering existing customers a promotion to balance transfer until June 2010 at 0% with a 5% handling fee.

Is it worth me doing?

Am I right in thinking its better to pay a one of 5% fee than pay 5.2% every month? Even if I cant transfer the full balance?

Would it be worth me trying to increase the limit on my Virgin Card first?

Any help would be great

Did you mean you are paying off £50 a month rather than £500?

geordie_ben

Nope, £500 was not a typo, I pay Five Hundred Pounds a month off my debt

dfh

You could calculate how much total interest you will pay till July 2010 and compare it with the 5% fee and see which works out cheaper.I am not very good at maths but my gut instinct tells me it wont be much different !

sdooley

No it's not better for you, assuming the Halifax is a life of balance offer.

If you actually pay the balance off by June 2010, it's better to stay with Halifax because although your annual interest is 5.2%, you will be paying that monthly on a declining balance, i.e. 0.43333% per month x £5000 = £22 per month at first reducing to 0.43333% per month x £500 = £2.20 in the last month. By comparison you'd have paid £250 up front for the balance transfer.

If you don't manage to pay it off in time it's even better value to stay with the Halifax life of balance rate as you'll be paying 20% or whatever when your 0% rate ends.

geordie_ben

Thanks Sdooley, I've been trying to do the sums to work it out.

And my money will defs be paid off by June next year if everything goes to plan

geordie_ben

Morn wrote: »

Did you mean you are paying off £50 a month rather than £500?

It's very hard work but possible, and it means i'm going to be debt free in 10 months and only started paying it off in March :beer: and i'm not even on a good wage, just very strict with my money

CannyJock

If you leave it as it is, you'll pay Halifax £115.20 in interest (0.4233% is monthly equivalent of 5.2% APR - see the rate converter on the stoozing site).


If you transfer £2850 (95% of £3000 limit), pay the minimum on the Virgin card until the Halifax is clear and pay the rest of your £500 to Halifax, you'll pay Halifax £36.03 in interest



But the snag is that you'll have paid £142.50 fee to Virgin!



So no, best to keep it as you are, or ask MBNA to reduce their fee below 2.7%

geordie_ben

Canny, how did you work the interest out??

If you've put this in excel can you copy and paste the formula please

dfh

CannyJock wrote: »

If you leave it as it is, you'll pay Halifax £115.20 in interest (0.4233% is monthly equivalent of 5.2% APR - see the rate converter on the stoozing site).


If you transfer £2850 (95% of £3000 limit), pay the minimum on the Virgin card until the Halifax is clear and pay the rest of your £500 to Halifax, you'll pay Halifax £36.03 in interest



But the snag is that you'll have paid £142.50 fee to Virgin!



So no, best to keep it as you are, or ask MBNA to reduce their fee below 2.7%

Wow ! I am impressed !