Any good? Barclay's 0% balance transfer until paid off

Neoshoegal

Got a letter from Barclays (usually I just throw away any letters for credit cards), but this one may be interesting.
It states: "0% balance transfers until paid off, as a thank you for spending £25 each month"
"We offer you 0% on your transferred balance until you've paid it in full. You can transfer as many balance as you want like this up to your limit ... It's our way of thanking you for using your Barclaycard Platinum to spend £25 or more on purchases each statement month. You'll need to act fast as there are no balance transfer fees for the first 60 days...
Your purchases will be charged at our Flexi-Rate and will continue to incur interested while your balance transfers are being paid off. When we receive your payment, we'll reduce your transferred balance first. In months where you spend less than £25, the interest on your balance transfer will be charged at your flexi-rate..."

Is this any good?

PoorDave

Neoshoegal wrote:

Got a letter from Barclays (usually I just throw away any letters for credit cards), but this one may be interesting.
It states: "0% balance transfers until paid off, as a thank you for spending £25 each month"
"We offer you 0% on your transferred balance until you've paid it in full. You can transfer as many balance as you want like this up to your limit ... It's our way of thanking you for using your Barclaycard Platinum to spend £25 or more on purchases each statement month. You'll need to act fast as there are no balance transfer fees for the first 60 days...
Your purchases will be charged at our Flexi-Rate and will continue to incur interested while your balance transfers are being paid off. When we receive your payment, we'll reduce your transferred balance first. In months where you spend less than £25, the interest on your balance transfer will be charged at your flexi-rate..."

Is this any good?

From a quick read it sounds like you get charged interest on any outstanding amounts (transferred or purchases) if you don't spend £25+ pcm on the card, but purchases are not at 0% (flexi-rate). They pay any payments you make off the transferred debt first, so you will rack up an increasing debt at the flexi rate, it seems.

Doesn't sound like a good deal. If you BT to this card, the amount you transfer will become trapped and you won't be paying 0% on it.

Neoshoegal

From what I read it looks like you only pay interest on the £25 each month and that seems to be a maximum on 12.5%

Rafter

At the start this is good as the amount you pay on purchases will be very small in relation to the interest you will be saving on your balance transfer.

Over time though the amount at 0% will reduce.

If you don't spend the £25 in a month you could end up with problems too.

If you get a decent enough limit, this card probably beats a conventional balance transfer offer with fee for about 12 months - after then the £25's will have built up enough to mean the interest you are paying isn't worth it, so better to transfer again.

R.

grumbler

See some calculations here: Barclaycard 0% Forever on BT's ...

Milarky

[Having reworked the type of calculations shown on the linked thread to take account of the 'no fee' condition on this offer, ther following estimates of profits possible are offered]

If you borrowed £5000 and spent exactly £25 per month and earn 3.6% pa net interest (4.5% gross as a basic rate taxpayer) on remaining unpaid amounts then you will make the following if you pay respectively 2% (FR 16.9%), 5% (FR 12.9%) and 10% (FR 9.9%) of the reducing account balance:

2%: £219.63 in 30 months

5% £158.60 in 24 months

10% £106.81 in 18 months

Borrowing £4000. these figures become:

2%: £155.57 in 26 months

5% £117.41 in 22 months

10% £81.34 in 19 months

Borrowing £3000. these figures become:

2%: £98.58 in 22 months

5% £79.02 in 19 months

10% £57.11 in 15 months

These figures allow for the interest you make on the reducing balance transfer at the deposit rate (above) plus an assumed amount of interest (at the same deposit rate) on the cumulative value of your purchases. This is because whatever you purchase you defer repaying this debt for 'X' months. In this sense 'purchases' can be added to the reducing balance transfer actually on deposit because to have paid them at the time (or within the usual interest-free period) you would have ot have drawn from savings.

But in all cases it seems better to slow the repayments and incur a higher FR interest than to make larger payments at a lower rate.