Loan transfer to MBNA Life of balance CC

Steameh

Hi all,

Just have a question regarding transfering my loan to the MBNA Life of Balance credit card.

My current loan is at 9% APR. The balance details are as follows

Total Outstanding: £10,273.77
Settlement Figure: £9,442.01

I have 27 months left on this loan and my monthly payments are £380.51

I am considering applying for the MBNA Life of Balance credit card. This would be 5.9% APR on £9442.01. I will be paying a minimum of £380.51, the same as my loan and overpaying by at least £100 every month.

What I would like to know is. Is it worth the transfer? What would the monthly interest be on £9442 at 5.9% APR? I know this will decrease as I pay more off, but a rough idea. How much would I save if I paid it off over 28 months, in comparison to my loan?

Thanks

CannyJock

Steameh wrote: »

What would the monthly interest be on £9442 at 5.9% APR?

Would start at £45.22 - use this calculator to turn the APR into a monthly % http://www.stoozing.com/mon2yr.htm

Steameh wrote: »

What I would like to know is. Is it worth the transfer?

Yes from the numbers I put in.

Your settlement figure will save you £831.76 in interest.

If you make the same payments of £380.51 you'll pay a further £634.21 in interest for a net saving of £197.55

If you over by £100 as you say, then you'll only pay £498.24 in interest for a net saving of £333.52

This assumes there's no BT fee for the MBNA transfer to your current account - you sure there's not a 4% fee for them doing this? And the maximum amount you can transfer to a MBNA backed card is 95% of your credit limit so you'd be needing roughly a 10K limit on the card.

It does however give you the option of making "regular" payments to reduce the balance, so if you get paid weekly, make payments to the card weekly to reduce your interest even further.

EDIT: With 4% fee, your £9442.01 becomes £9819.69. First month's interest will be £47.03. With 4% fee, total interest without and with overpayment rises to £687.22 and £539.37. You'll still save money if you get the credit limit you're needing.

Steameh

CannyJock wrote: »

SNIP

There is a balance transfer fee of 1.5%. I also requested the balance transfer on the application so they know I need a hefty credit limit.

My credit score is 999 so hopefully that'll help a little with the application.

I have two jobs so the plan is to pay £380.51 out of my main salary then chip away at it with the other income. I also have £1000 in savings but I plan on keeping that for a rainy day. I think I'm going to pay half of the second income off the credit card and save the other.

Thanks for the detailed reply. Very helpful.

EDIT: Realistically I could afford to pay off alot more than £380.51

I put £60 away in savings from my main salary which I could easily pay off the loan. I earn £222.40 every 4 weeks from my second job which could all go towards repaying. That's a total of £662.91 a month. Almost £8000 in 12 months.

izools

Steameh wrote: »

I also have £1000 in savings but I plan on keeping that for a rainy day.

Unless you're savings account pays more than 5.9% APR, you're wasting money saving rather than using it toward the debt

Steameh

izools wrote: »

Unless you're savings account pays more than 5.9% APR, you're wasting money saving rather than using it toward the debt

Yes, I realise that. But having £1000 in savings means more to me than saving a few quid on interest. I have so much bad luck with my car and other things, it is just nice to have a safety net.

CannyJock

Steameh wrote: »

There is a balance transfer fee of 1.5%. I also requested the balance transfer on the application so they know I need a hefty credit limit.

https://wwwa.mbna.co.uk/apply/UKCCapp/Ctl/entry?sc=8pt48rfl_ost&mc=ECO-UK-33333-12386

According to this the 1.5% fee is only for other credit card balance transfer.

If you're planning to transfer a loan then you need the money in your current account to repay the loan which means a money transfer at 4%.

There's some anecdotal evidence on the stoozing site that requesting large balance transfers can maximise your limit but never been proven and no guarantee.

Steameh

CannyJock wrote: »

https://wwwa.mbna.co.uk/apply/UKCCapp/Ctl/entry?sc=8pt48rfl_ost&mc=ECO-UK-33333-12386

According to this the 1.5% fee is only for other credit card balance transfer.

If you're planning to transfer a loan then you need the money in your current account to repay the loan which means a money transfer at 4%.

There's some anecdotal evidence on the stoozing site that requesting large balance transfers can maximise your limit but never been proven and no guarantee.

Will I still be saving money at 4% transfer rate? The main reason I want to do it is for the flexibility of overpaying. I could see most of my loan gone in 12 months time.

If I don't get the limit I require I'll just close the account.

Thanks

CannyJock

Steameh wrote: »

Will I still be saving money at 4% transfer rate? The main reason I want to do it is for the flexibility of overpaying. I could see most of my loan gone in 12 months time.

If I don't get the limit I require I'll just close the account.

Thanks

Already answered this

Flexibility to overpay is definitely a good reason to go down this road.

I wouldn't close the account if you don't get the limit if I were you, I'd simply apply for another SBT card http://www.stoozing.com/sbt.php

If you wanted to be really clever, then you would do the BT(s) to your current account and clear the loan. Pay the minimum payments to the SBT card(s) during the promotion period and stick the "overpayment" in a couple of high interest current account earning up to 6% AER. Then a few weeks before the 0% promotion period on the SBT cards ends, use the funds you've now saved to clear the cards in full. You'll not only have paid less interest, but you'll have earned some too - so long as you're disciplined enough to stick to the plan of course.

Steameh

CannyJock wrote: »

Already answered this

Flexibility to overpay is definitely a good reason to go down this road.

I wouldn't close the account if you don't get the limit if I were you, I'd simply apply for another SBT card http://www.stoozing.com/sbt.php

If you wanted to be really clever, then you would do the BT(s) to your current account and clear the loan. Pay the minimum payments to the SBT card(s) during the promotion period and stick the "overpayment" in a couple of high interest current account earning up to 6% AER. Then a few weeks before the 0% promotion period on the SBT cards ends, use the funds you've now saved to clear the cards in full. You'll not only have paid less interest, but you'll have earned some too - so long as you're disciplined enough to stick to the plan of course.

Ah yes, so you have.

I could do the savings thing you suggested. I'm pretty organised when it comes to my money. The only thing is there is no guarantee that I'll get the right amount of credit by applying for more cards. If I don't get that then I'm screwed. Will have a loan to pay and have paid a balance transfer fee for nothing.