Egg card balance transfer confusion

downshifter

Good afternoon all

Around Christmas I received an email from Egg about an offer of balance transfer of 2.9% until July 2010 with a fee of 2.9%. I don't understand the difference. Isn't this the same as saying the balance transfer will be at 5.8%? I'm thinking of doing it as there is nothing on my Egg card at the moment (credit limit £7,800)and Egg will Balance Transfer into your bank account, which is what I need to cover my tax bill (I'm around £700 short due to unexpected family expenditure)

Am I right about the 5.8%. If so it seems a reasonable idea, I should be able to pay it back by July and if not, can always bt it to a 0% card.

Or is there a better way of raising this money? I don't think there are many cards that will pay into a bank account and a loan for this amount seems a bit daft, rates aren't good for short term smallish loans.

Thanks very much

DS

CannyJock

The 2.9% fee is applied immediately, the 2.9% APR is applied monthly (i.e. 0.2385% per month).

You could also use the BillPay service on HMRC website on a 0% purchase card. They charge a 1.25% fee but it counts as a normal purchase on your card.

downshifter

Thank you, I wasn't sure I'd be able to do this as part would come from my current account and part from a card. The rest of the money is in a cash isa which will be due only a few days before the end of the month (without losing interest) so I stupidly haven't given myself much time to move it around.

A new 0% card looks like being the way to go then. Thanks.

NickX

downshifter wrote: »

I received an email from Egg about an offer of balance transfer of 2.9% until July 2010 with a fee of 2.9%. I don't understand the difference. Isn't this the same as saying the balance transfer will be at 5.8%?

No they are offering you a rate of 2.9% until July. This is an annualised figure, but bear in mind this will expire in July.

The fee of 2.9% is an additional charge for transferring the balance. This is not an APR or even a rate if interest.

downshifter wrote: »

If so it seems a reasonable idea, I should be able to pay it back by July and if not, can always bt it to a 0% card.

It is a reasonable idea. If you are able to pay back before July, then you are getting a decent rate for a short term loan. The cost is approximately :

Amount you Borrow * (0.029 + 0.0144)

The 0.029 is the fee. The 0.0144 is an estimate at the amount of interest you will be charged.

I have estimated this to be an estimated APR of 8.868% for the six month period.

downshifter wrote: »

Or is there a better way of raising this money? I don't think there are many cards that will pay into a bank account and a loan for this amount seems a bit daft, rates aren't good for short term smallish loans.

It is a pretty good rate, but you could get 0% for 16 months with a 4% fee for Money Transfers from a new Virgin card. This would save you even more money.

NickX

CannyJock wrote: »

You could also use the BillPay service on HMRC website on a 0% purchase card. They charge a 1.25% fee but it counts as a normal purchase on your card.

Good Call. This in conjunction with a 0% Purchase card is better than the 16 month Virgin Money Transfer option.