have I done the right thing????

Dumplin

Thank you for your really helpful advice on Friday, I have now got a plan and after a few phonecalls all balances will on lower rates woo hoo.

Below is what I'm left with

Card limit rate balance
Virgin Visa MBNA 6,500 14.89%
Tesco MBNA 1,400 7.90% Life 1,400
RBS RBS 4,000 7.90% Life -
Mint RBS 4,350 6.90% Life 4,000
Barclaycard 11,700 5% Life 9,100
Barclaycard 7,900 5% Life 6,491
Abbey VisaMBNA 7,500 3.90% 10/05/05 -
Texaco Accucard 3,500 3.90% Life 3,500
Abbey M/C MBNA 2,500 0% 10/05/05
Virgin Visa MBNA 2,000 0% 31/03/05 -
Citibank 4,360 -
A&L MBNA 500
Abbey VisaMBNA 8,200 14.89%
Egg 3000 0% (not sure just opened it)
TSB 3000 0% 12 months

I think this is my best option I could move a lot of the balances over to the 0% but will mean an awful lot of bt's and as a lot of the cards are MBNA I'm not sure how feasable this will be. I think I could run out of capacity.

I calculate i will have available £45k of card at rates from 0% to
14.89 I'm sure now I've moved the balances Virgin and Abbey will do something better than the standard rate if I can get them down to the 3% region and they allow SBT is it worth Stoozing,

I know that when the 6months is up I'll have to pay it back but 6 months in my savings account has got to be better than not at all hasn't it??

Using Abbeys on line calculator if I put in £40k it would generate £1940 in interest over 12 months so say £970 for 6 months I'd dont think i't cost me that in saved int payments if I used the 0%'s (does that make sense) and once I'd payed it back surely they'd offer me another deal??

Please let me know what you think as I'd like to be sure I'm not cocking it up again!!! or if you can see another way I'm all ears.

Really enjoying the site ( becoming a bit of an addict) I'm surposed to be revising for exams

Thanking you all in anticipation

Dumplin

Walletwatch

Hi there

This post of yours was not very clear to be honest, so I went back to your earlier post (Juggling credit cards) First of all, it is not very clear what you are looking for - on the one hand, you have quite some amount outstanding on credit cards, on which you are paying high rates of interest. On the other hand, you express an intention to stooze in this post of yours.

Don't know if I have got you completely wrong here, but before thinking of stoozing, I think you need to first look to moving to a situation where your debts (the ones that cost you interest) are reduced to zero. Towards that you need to BT your debts around, so that the cards on which you are paying the highest interest rates are closed out.

Considering that the BT charges are capped to max amounts of £40 or £50 in most cases, I think you can safely assume that you'll still be gaining by BT'ing high interest debt to zero percent MBNA cards. You should however, check specific cases for BT fees, and calculate exactly what you will end up paying, which will obviously depend on the amount transferred.

After you minimise the interest amounts you pay on your cards, you then need to cancel out all cards that you no longer will be using. Also, you need to ensure that you make the minimum payments that are applicable on the cards that you are left with.

The next idea is to keep working away at life-of-balance cards and reduce the outstandings to zero, simultaneously looking for other 0% deals that come up. Cancelling your costlier cards should hopefully free up some credit limit for you, so that you can apply for these new deals.

Cannot stress this enough, focus should be to ensure that you move to a situation progressively where your interest outflow reduces to zero. It is only after you achieve this milestone that you should consider borrowing money from a 0% card and putting money into a savings account (stoozing as we know it)

Reproducing your earlier post to provide context to this discussion:

Hi All,

I need some advise. We have got ourselves in a bit of a mess with our cards. We owe between us £24k, (£37 inc loan) we are not in arrears but we are sure there is an cheaper way of paying things off.

I  have  
Barclaycard limit of £11700 Balance of £3900 @2.9% and £5200 @6.9% for life of balances currently paying £200p/m.

Virgin Visa limit of £6000 Bal of £4000 @14.89% paying £100p/m  

Abbey visa limit £2500 Bal £1800 0% till May 05 paying £50 p/m

Available  
Abbey mastercard limit £7500 Bal 0 offered 3.9% till May 05
RBS visa limit £4300 Bal 0 offered 7.9% life of balance
Tesco limit £1400 Bal 0 offered 7.9% life of balance

Hubby has  
barclaycard  limit of £7900 balance of £4423 @2.9% and £2046 6.9% for life of balance currently paying £145pm.

Abbey Visa limit £8200 balance of £2800 @16.62% paying £100 p/m

available
Virgin visa limit £2000 0% till mar 05
Mint limit £3800 offered 6.9 for life of bal
Texaco £3500 offered 3.9 for life of bal
Also have citibank limit £4360 checking any offer.

I also have a personal loan with A&L otriginla loan £15k balance to clear £14000, 41 months to run @ 6.4% payment £364

bewteen us we pay £545 per month (£899) inc loan

I think Ithingyed up when I did the barclaycard bt's saw it as an average of 4.9% but it's not.

Any advice as to what I should move to where would be really apreciated.
B/C are now doing 5.9% for life to max £5k max should I clear these then move some back?? or get second loan to clear best I've had so far is 5.8 from AA (not confirmed) I just cannot see what to do for the best.

I estimate as we are currently paying things off it will take between 36 & 49 months to clear.

Many Thanks in advance  

Dumplin

Walletwatch

To clarify, the interest that you would save by BT'ing a higher interest debt to a 0% card is:

P*n*r/36500

where

P = Balance transferred from card A (higher interest) to card B (the zero percent card)
n = number of days left on the 0% card
r = rate being charged on card A

If the above amount is less than the BT fee you will pay for transferring the balance P, the BT is not worth it, else you are better off going ahead with the BT.

Similarly, moving from a higher rate to a lower life-of-balance rate will save you the following amount per year:

P*(r1-r2)/100

where P is the amount transferred, r1 and r2 are the rates being charged on the higher and lower rate cards respectively.

Calculating whether this is worth it is tricky, as there is no end date to a life-of-balance deal, so you will need to project the end date by estimating when you will have enough capital to pay off the debt itself. If you can do this, then you can use the following formula to calculate the interest that you'll be saving by the transfer:

P*n*(r1-r2)/36500

where

P = Balance transferred from card A (higher interest) to card B (the zero percent card)
n = number of days in which you estimate you'll pay off the debt.
r1 = rate being charged on card A
r2 = rate being charged on card A

Hope I've clarified things, instead of muddling them...

Dumplin

Not making my self very clear am I I think it's just I have so many balances and cards to play with I just can't see straight.

but i think i may have just seen the light!! I think I need to do this in 2 stages.

Stage 1
Move the two 14.89% 's to the available fixed for lifes
this will free up the MBNA Virgin & Abbey with large Limits

Stage 2
See what they offer % wise? and have another shift around,

My only concern is if I move balances off fixed for lifes to short term low % there's no guarantee the fixed for lifes will be there when I want to transfer it back or that the existing card will give me a good rate at the end of the low %. How high is the risk of this happening?

I just thought that the fixed for lifes were the safer option but I would save doing it the other way

As far as the stoozing, i just thought that if It wasn't worth doing a bt to a 0% card due to risk etc then was it worth putting this credit limit to use. but I can see how it looks

I really am grateful for the advice, things getting a bit clearer.

thanks
Dumplin

Walletwatch

The lowest life-of-balance interest rate you are currently paying is 3.9%. Assuming you borrow from a 0% card and put it into a high-paying savings account with rate at say 5%, the post-tax rate you'd get would be 4% - hardly making you any money for the 0% deal.

On the other hand, you could use this to drastically reduce the interest outflows for the interest-free period by BT'ing all your high-interest debt to these 0% cards, and use the slack that you get during this period to try and pay off the principal outstandings on these cards.

Dumplin

Sorry to be a pain,

I see what your saying, can I just check that you don't think I'm likely to get stuck when the 0%s run out,

I surpose if I move it all to MBNA cards now , then when the 0%s run out move it all to the other lot (Barclaycard and the like), and just keep playing ping pong. I shouldn't have too much of a problem should I? I allways pay more than the min so with the interest free it should reduce the debts a lot during that 6 months.

It's not likely that I'll have problems getting deals on the other cards when I need to BTin 6 months is it?

You are a super star and as hubby's gone to bed I'll send you a smacker :-* for all your help.( although he is very greatful to)

I promise i'll go to bed and leave you in peace now.

MANY MANY THANKS
Dumplin

Walletwatch

Sorry to be a pain,

I see what your saying, can I just check that you don't think I'm likely to get stuck when the 0%s run out,

This is something we should check upfront before doing the BTs. So, for example, if your costliest debt (which will be the first to transfer) is 14.89%, the first thing to do would be to check what the interest rates for the 0% cards will be after the zero interest period is over. I think at least with egg, you should not be worse off, but we need to confirm this.

Also, bear in mind, that at times, comparing interest rates of different cards is like comparing apples and oranges. So, even if we do find that card A is charging a higher rate than card B, other things like the date w.e.f. which the interest is charged, etc. may result in the net interest outflow amount actually being lower on card A.

I allways pay more than the min so with the interest free it should reduce the debts a lot during that 6 months.

Exactly. This is the practice that will stand you in good stead, so if you were paying an amount of say, £50 on a card monthly, of which £40 was towards interest, then, after BTing to the 0% card, if you keep your payments at the same level, you will actually end up clearing more of your outstanding debt, which will automatically mean that even at the end of the 0% period, the interest that you would have to pay would be on a reduced principal, and hence, a lesser amount in all probability.

It's not likely that I'll have problems getting deals on the other cards when I need to BTin 6 months is it?

Now, that is something you and I cannot project sitting here and now. For all you know, this fad of offering 0% deals might have vanished, and there may not be any more forthcoming six months later (I hope not )

What is encouraging however is the fact that you have managed to accumulate so much of credit, seemingly without too much of problems. To maximise the chances of you getting these deals though, you MUST cancel existing cards that you're no longer using. (might help to cite possession of other 0% cards as the reason for closing down these old cards, who knows, you might just get a renewal or a lower interest rate offer from them ;-))

You are a super star and as hubby's gone to bed I'll send you a smacker :-* for all your help.

Hmm, lemme see, Mrs WW is fast asleep, so I guess i can afford to be naughty as well , so here goes :-*

Go to bed in peace and good luck with your reading...

HTH

zcaprd7

I would consider getting around at least half your debt on 'good' life of balance transfers - maybe more - and then try and bounce the rest around on 0% deals.

Bear in mind that if the 0% deals run out or you can't get any cards then potentially half you debt could shoot up to painful interest rates - so always try to get the 2.9/3.9/4.9/5.9 % life of balance deals and then you can forget about them (just do minimum payments).

I would then concentrate on reducing the amount you are bouncing around to a level you are 'comfortable' with, then start over-paying your life of balance debt.

ffs

Clever use of credit, i.e. balance transfers to lifelong low interest rates allows you to do one thing very succesfully: increase your total borrowing.

It seems quite ironic to me now that making sure you get the best deal actually makes you worse off in the long run, and of course I would never have believed it some years ago.

deemy2004

Clever use of credit, i.e. balance transfers to lifelong low interest rates allows you to do one thing very succesfully: increase your total borrowing.

It seems quite ironic to me now that making sure you get the best deal actually makes you worse off in the long run, and of course I would never have believed it some years ago.

Don't understand the above.....?

Borrowing at 0% and at low for life transfers and then paying down the debt is a positive, as it costs less in interest then any other type of loan.

Another positive is stoozing, but thats a different story