Accumulating a balance to transfer!?

semi_artificial

Apologies, I'm new to this part of the site and am pretty sure I'm about to ask a stupid question.

I have a 'Goldfish' credit card and pay the normal 'few hundred' pound monthly balance off in full by direct debit.

The idea of having, say, ten thousand pounds on a 0% card while the money earns interest appeals but how do I get this sort of balance in the first place to transfer?

I guess the answer is spend money - how is the question. I'm thinking I just don't spnd enough in a normal month to justify a balance transfer.

I thought I may have an opportunity now, as I'm in the process of buying a car (for cash) but the dealer doesn't accept credit card payment for the £10k owing.

Any thoughts welcome!

fatboyonadiet

it works slightly different to how you're thinking. People get approval for a card with a large limit that Super Balance Transfer most of it into a high interest account and earn interest on this balance.

Hope that clears things up slightly

semi_artificial

So, is this how it works?:
- I get a card with a, say, £10k limit
- transfer £10k to an interest bearing account.
- pay nothing until 'X' date
- then pay back the £10k
- or transfer the balance owing somewhere else?

Seems too good to be true but, if so, which cards will offer this?

Unbelievable_2

semi_artificial wrote:

- pay nothing until 'X' date

Not quite - you have to pay the minimum payments requested on the statement each month and on time (otherwise you'll lose the 0% and pay penalities).

Credit cards which allow balance transfer to a current account are Egg, MBNA and Mint (via Transfer & Save cheques if they are still doing them). You must check all terms and conditions applying at the time 'cos some cards charge for BTs and others don't and credit card offerings are changing all the time. :rolleyes:

semi_artificial

Thanks.
I've now searched and read the article on super balance transfers

When requesting a card - EGG for example - do I have any control over the limit that will be on the card?

Reaper

No, Egg will give you whatever they feel like. However after about 3 months you may well be able to increase it.

For more information on what you are trying to do there is a comprehensive explanation at https://www.stoozing.com, although as with all articles details of individual credit card features may be out of date.

dag_2

Credit cards which allow balance transfer to a current account are Egg, MBNA and Mint (via Transfer & Save cheques if they are still doing them).

So if you want to transfer a loan or overdraft balance to a card other than Egg or MBNA, you should transfer it first to Egg or MBNA, then transfer the Egg/MBNA balance to your other card.

Even if you don't have or can't get an Egg MBNA or Mint card, there are other ways of transferring an overdraft or loan to a credit card - but you need to have at least two credit cards - a "good" card which offers you a low rate for balance transfers, and a "bad" card, which can be any credit card from a different institution to the "good" card.

Technique 1: take a cash advance from the "bad" card, and deposit it in your current account. Then transfer the balance from the "bad" card to the "good" card. Drawback: this is likely to incur a cash advance fee of 1.5% to 2%, so probably isn't worth it unless the balance transfer interest rate is much cheaper than your loan or overdraft interest rate, or unless you're likely to incur penalties if you don't do it.

Technique 2: write a cheque on the "bad" card, and deposit it in your current account. Then transfer the balance from the "bad" card to the "good" card. This will usually be much cheaper than taking a cash advance, because you won't have to pay cash advance fees. However, you'll still have to pay a few days of cheque interest, and it's likely to take a few days longer than a cash advance. Not all credit cards issue cheques, and this technique only works with those that do.

Technique 3: transfer a non-existent balance from the "bad" card to the "good" card, so that you get a credit balance on your "bad" card. Then phone up the "bad" card and say "whoops I've overpaid my account, can you send me a refund?". They will probably send you a cheque that you can pay into your current account. Drawbacks: they might take a week or two to pay your refund, and might not pay until after your next statement date. If the credit balance is a few thousand or more, they might use the excuse of money laundering investigations to delay paying you back. If you can't get the refund into an interest-bearing account fairly quickly, it defeats the point of making the balance transfer in the first place.

Technique 4: use your "bad" card to pay for as much of your grocery shopping as possible, that you would have normally paid for with cash, or with a debit card. Transfer the balance from the "bad" card to the "good" card once a month, or as often as you can, and make only the minimum payment on your "good" card. This will cause a gradual buildup of your cash or current account balance that can be used to pay off other debts. But it takes a long time, and it can't be used to transfer large lump sums in one go. It also creates more of a temptation to spend money for the sake of it. That said, there's nothing to stop you using this technique in conjunction with one of the other three.

Has my description helped?

johnllew

Not such a good idea?:

dag wrote:

Technique 3: transfer a non-existent balance from the "bad" card to the "good" card, so that you get a credit balance on your "bad" card.

MSE_Martin wrote:

Lying to a card company about having a balance can be deemed as fraud. To be honest it is unlikely you will get caught doing it. However if you do - having spoken to card companies - the minimum is you will have the special offer interest rate withdrawn, the maximum is prosecution.

martin

bethyblue612

I "accidentally" put a credit balance onto a Nationwide card a couple of weeks ago, but when I asked them to send me a cheque for it, they said that they couldn't. As it was originated by a balance transfer, the only way to get the money back was to balance transfer it off again, so I ended up having to put it through Egg anyway and lost a few more days interest.


PS That's not my tag-line!!

dag_2

Lying to a card company about having a balance can be deemed as fraud. To be honest it is unlikely you will get caught doing it. However if you do - having spoken to card companies - the minimum is you will have the special offer interest rate withdrawn, the maximum is prosecution.

Hmm. Okay - how many people are actually serving time for this? I bet it's not many.

Admittedly I've never done this though. I have deliberately put cards into credit before - but only to pre-empt the interest, so that I can take advantage of a balance transfer offer from a zero balance as soon as possible after the statement date. And sometimes I have created this credit with a balance transfer.

For example - card "B" has £1000 balance, card "C" has £2000 balance, but card "C" has a cheap balance transfer offer that I want to take as soon as possible - but I don't want to carry on paying interest on the existing "C" debt. I'm expecting card "C" to charge £20 interest next month - so I transfer £2020 from "C" to "B" - "C" now has £20 credit - wait for "C" statement - "C" interest is deducted from credit balance, so "C" now has zero balance - then transfer £3020 from "B" to "C". Have I explained that okay?

There have been times when I have accidentally put cards into credit, due to direct debits after paying them off in full - but I've never had any problems getting a refund when this has happened.

But I agree, using balance transfers to create credit balances is not a good way to pay off an overdraft - but then again, neither are any of my other suggestions. The best way is to transfer through a card that offers SBT.

But not everyone has an Egg or MBNA card - and some of those who do have only small limits, but large limits on other cards. I'm just saying - there are other ways of doing it.