Another nail in the coffin for fee-avaoiding Rate Tarts. . . .

Redgable

Hi guys,

Been receiving the MSE.com mails for some time, but just registered for the forums and this is my first forum post. Great web-site!

Like many people I guess who've got wise to 'rate-tarting', I've had a number of different credit cards over the last couple of years, the balances of which are used (along with some personal savings) to off-set my mortgage. I always go for the 0% no-fee cards (sadly few of these seem to exist now as credit card companies get wise to tarting) over as long a term as possible. Over the last two years I've had approx six different cards, albeit usually no more than two cards open at any time. Minimum monthly repayments are funded out of the original balance transfer, and cards are always closed when the promotional period offer ends to avoid paying interest charges and also to protect my credit rating.

I've just received my latest Cooperative Bank Visa Card statement - a card I took out in January this year on the advice of this web-site :money: (no hard feelings, Martin!) for an 8 month 0% balance transfer period + with no fee) and guess what? The little blighters are now charging a whopping 2% fee (min £5, max £100) for any balance transfers made TO the card from other credit cards during the promotional period :mad: A double whammy! Either pay up when/if you arrange another balance transfer OR start paying interest at the non-promotional rate.

Anyone else noticed this with any of their existing lenders, or is it a new trend? I do wonder whether the credit card companies can actually apply this rule retrospectively, ie for existing card holders? I've just received my new Norwich & Peterborough Visa card (0% balance tfr for 6 months AND NO FEE!!!) with a view to switching the Co-op balance to it, but will need to re-think my strategy. As far as I'm aware, credit card companies will only transfer balances to credit or store cards, not to bank accounts which would have solved the problem.

Any thoughts anyone?

Milarky

The answer with this card (Co-op Travel?) is partly to transfer as much as possible over £5000 by asking them to match another credit card higher limit (if you have one) This is possible for some moneysavers who have particularly high limits already but for the majority I guess that it a non starter.

The alternative is to 'slow stooze' - meaning to use the 7 months on purchases (but only during months 1 to 5 because it the last sixty days you can start using a standard card and just clear it every month) that you would have made anyway to save the interest on - either by offsetting or just leaving it to collect in a savings account. That does require more discipline though and won't generate you much profit.

But with offsetting (at 5-6%?) as your goal I would have thought you are more able to 'afford' these charges of 2% than conventional (debt-free) stoozers who must 'struggle on' at net savings rates of 4-4.5%? What about a nice 'life of balance card' (4.9%?) to tide you over? Only take these if there is some advantage over the mortgage rate however.

The trouble with successful stoozing is that when it has built up to a significant level (eg several cards at once) it is bound to unwind very quickly. In reality is stoozing is just a game of chance - the chance that another card offering will come around the corner in the nick of time. Even if fees were not being introduced it would still be the case that stoozed sums would go up and down in 'waves' as I'm sure you recognise.

Redgable

Many thanks for this.

I've always switched the maximum possible over to repay the old card (most lenders will only let you transfer 90% of your available credit limit anyway) - I've never used 'tart' cards for anything other than a balance transfer to offset my mortgage. I'm probably offsetting about 25% of the mortgage debt at the mo - in fact with savings etc, I haven't paid a penny in interest on my mortgage since I remortgaged just over a year ago. I've got separate AmEx Platinum (2% cashback at the mo) and Circle Mastercard (1% cashback) cards for normal use.

Looks like I'd already arranged to repay the Coop Travel card balance when I took out the new Norwich & Peterborough Visa card, so I may get stung for the £100 Coop fee.

HOWEVER, I've poured over the Coop card terms and conditions this morning, and there's a clause in there stating that if as a customer you feel you're disadvantage by any subsequent change to T+Cs, you can avoid whatever the penalty is and close your account PROVIDED YOU GIVE NOTICE TO CLOSE THE ACCOUNT WITHIN 60 DAYS OF THE CHANGE. This obviously doesn't apply to interest rate changes, but it says nothing about other fees, especially this fee which didn't exist when I took out the card.

It pays to read the small print, even retrospectively! I've written to the Coop today, and will wait and see what they say.

michaels

Are you sure that when they mean balance transfer 'TO' the card they don't mean transfering a (negative) balance from an other card to the coop card rather than paying off the existing coop promotional balance by transfering it to another card? (Apologies if I have completely misunderstood your post)

Redgable

Good question!!

The message says:

"From 1st July 2006, any balance transfers made to your card during the 0% promotional period will be charged a fee of 2%, £5 min, £100 max. No fee will be charged on balance transfers made to your card once you have reached the end of your promotional period".

Must admit, I've interpreted this as 'balances in', ie transfered from other cards to repay the Co-op balance. 'Balance transfers made to your card' doesn't sound like debt transfered in, but I may be wrong.

What does anyone else think?

I'm due to pay off the card anyway and am obviously wanting to avoid paying ANY card fees iin clearing the balance - old card or new.

Would be interested to know if anyone has experience of having being charged for clearing their outstanding card balance via a balance transfer from another card. Seems a tad rich to me.

sicker

You will not be charged to clear your balance due on your card. You will be charged their going rate to use their money to transfer to another card.

John