Balance Transfer to Current Act?

clairej168

Noticed this on an email from Virgin Credit Cards:

You can also transfer money to your current account from your Virgin Credit Card.* It's a simple way to clear your overdraft.

The T&Cs state:
* You will be charged a handling fee for a balance transfer, credit card cheque and cash transaction of up to 5% of the transaction (minimum £3) but your fee may be lower than this. Please check the My Promotions page or alternatively the Transfer Balances pages in your online banking site for details. You cannot transfer a balance from another card issued by MBNA. Money transfers will incur a handling fee, unless we have told you otherwise, of up to 4% of the transaction. Your promotional rate, should there be one on your account, will no longer apply from the beginning of any statement period during which you breach your terms and conditions. If you settle other cards or loans your monthly payment may be lower. Charges may be incurred for early settlement of other loans. When you pay us, we will put your payments towards your balances with the lowest rates first.

When I log into my account I see a choice of 2 rates for the transfer:

Contract rate for Current Money Transfers
A transfer handling fee will apply of 4.0% of the transaction (minimum of £3.00)

0.0% until June 2010 on all money transfers to a current account completed before 20 November 2009
A transfer handling fee will apply of 4.0% of the transaction (minimum of £3.00)

My questions are, is there a hidden catch somewhere that will cost me a bomb? I have another £3k available credit with this provider which I would love to be able to wipe off a higher interest rate debt. But is it really that simple?

TIA for any comments.
Claire

YorkshireBoy

clairej168 wrote: »

...is there a hidden catch somewhere that will cost me a bomb?

Yes...several.

Do you have an existing balance on the card?
Do you have a DD set up?
Will you only ever make the minimum payment?
Do you have a plan B...for if you can't repay/shift the debt before June 2010 (because you can put money on the fact that MBNA will hike your rate as soon as this 0% deal ends)?

clairej168

Hiya thanks for the reply.

Yes I have a balance of £2k on interest free, I am only making the min payment at the moment but thats because its at the bottom of the snowball. I guess what you are saying is it will be more difficult to tart 5k than the existing 2k when the 0% period ends?

Is that the only drawback - sorry I've just never heard of balance transfers to current accounts before and they sound so much like cash advances - which I know have huge rates - I thought they must be evil in a similar way?

Moggles_2

Unless you address the reasons for using the overdraft, there's a risk you'll rack up more debt on your credit card.

Moggles_2

I have a balance of £2k on interest-free.

Does this end in June 2010 as well?

NickX

clairej168 wrote: »

I've just never heard of balance transfers to current accounts before and they sound so much like cash advances - which I know have huge rates - I thought they must be evil in a similar way?

Not really evil with MBNA and other cards offering Super Balance Transfer facilities.

They are very much treated in the same way as standard Balance Transfers (but with a slightly increased transfer fee in the case of MBNA).

In actual fact they are a very powerful tool essential to profitable stoozing, Cash Advances are not and would almost certainly incur losses rather than profits. However, care must be taken, and you need to be completely clear on the Terms and Conditions of the deal that you are taking up before proceeding.

As per Moggles post, I would only mix two promotions on the same card if the promotion End Dates are identical.

clairej168

Hi Moggles,

No designer handbags I'm afraid. I've just got out of a northern rock "together" mortgage by selling the property but unfortunately had to chuck a bit of money at it due to the negative equity. I also have the unsecured portion left over which has now gone to a higher interest rate. I do count myself lucky to have sold and for only a relatively small amount less than I purchased for in 2007. I am now aiming to get rid of the remaining debt as quickly as possible by snowballing.

So really just wanting to make sure I tackle things in the right order and moving as much to lower interest rates as possible.

The original BT I did is on 0% til October 2010.

Thanks
Claire

NickX

clairej168 wrote: »

The original BT I did is on 0% til October 2010.

This is the catch.

If you take both promotions, what is highly likely is that after June 2010, any payments will go towards the original 0% deal, leaving the additional Money Transfer (which was 0% until June) accruing interest until the entire balance is paid off in full.

If you can clear the entire balance before June 2010, then this would not be a problem, but this is the hidden catch you are looking for.

clairej168

Thanks, I see... well I have learned something new which is always nice... had no idea these transfers were around. Its a shame about the different dates but thanks for explaining it.