MSE News: Don't ruin balance transfer savings by foolishly spending

This is the discussion thread for the following MSE News Story:

"Cheap balance transfer credit cards are back in vogue but millions still don't know how to use one properly which has cost them hundreds of pounds a year ..."

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Comments

  • CannyJock
    CannyJock Posts: 3,838 Forumite
    Combo Breaker First Post
    edited 4 June 2010 at 10:56AM
    As MBNA cards are offering 0% on purchases for 3 months in addition to their 0% balance transfer periods, you can actually get one now and use it for balance transfers and purchases. Obviously you shouldn't spend unnecessarily just because it's on a promotion ;)

    In 3 months time when the 0% purchase promotion ends, the change to their terms and conditions will have kicked in and your payments will go against the purchases - and between now and then because their allocation of payments pays the 0% that ends first, your payments will still go against the purchases.

    If you'd like to mention this in your next article or update the existing one, feel free to credit me with pointing it out ;)

    EDIT: Also worth mentioning that MBNA promotions run up until their "statement date" so when you phone to activate your account, be sure to ask them to change the statement date to "yesterday" - this allows you extra time for any DD to be setup and increases the length of 0% periods by a few weeks.
    "A child of five could understand this. Fetch me a child of five." - Groucho Marx
  • INT1
    INT1 Posts: 1,257 Forumite
    First Anniversary Combo Breaker
    I have taken up long term BT offer with MBNA and now they are sending me offers to encourage me to spend on the card, very naughty IMO!
  • CannyJock
    CannyJock Posts: 3,838 Forumite
    Combo Breaker First Post
    aldo wrote: »
    I have taken up long term BT offer with MBNA and now they are sending me offers to encourage me to spend on the card, very naughty IMO!

    They're trying to be naughty for sure, but you might be able to use it to your advantage - see above post.

    Depends when your 0% on purchases ends and the new T&C's kick in, although as said, your payments will be allocated against your purchases during the first 3 months.
    "A child of five could understand this. Fetch me a child of five." - Groucho Marx
  • gjs1701
    gjs1701 Posts: 163 Forumite
    First Anniversary Combo Breaker First Post
    I usually get PPI with my cards, which counts as spending when the payments are taken every month. So I wind up paying small amounts of interest.

    Which is annoying.
  • CannyJock
    CannyJock Posts: 3,838 Forumite
    Combo Breaker First Post
    gjs1701 wrote: »
    I usually get PPI with my cards, which counts as spending when the payments are taken every month. So I wind up paying small amounts of interest.

    Which is annoying.

    Cancel the PPI or take it out with someone independent of the card?
    "A child of five could understand this. Fetch me a child of five." - Groucho Marx
  • I owe a substantial balance to Egg but have about £3k of unused credit with them. A few weeks ago they offered me 4.9% on a BT till early November. I was unsure as to what to do due to the uncertainties regarding the changing of payment hierarchies. I dithered and didn't do anything in ther end.
    Now they've come back with 0% till early November. I'm tempted because it now looks like the payment hierarchies will change shortly afterwards. I'm OK with having £3k at the standard rate (20.9% for me by the look of it) after that because I will throw all spare money at them. If they try to outmaneouvre me by increasing the rate, I wqill just decline it and lose the spending facility. I rarely spend on cards these days anyway.
    One question: Does a ratejacking refusal impact badly on on the credit rating or is it viewed pretty neutrally these days?
  • CannyJock
    CannyJock Posts: 3,838 Forumite
    Combo Breaker First Post
    Now they've come back with 0% till early November. I'm tempted because it now looks like the payment hierarchies will change shortly afterwards.

    So the existing balance you have with Egg is at the 20.9% rate? Doesn't this just mean that if you take the BT offer, then between now and mid November when the 0% promotion ends, you'll be paying down the 0% transfer and your standard rated balance will be incurring interest? Once the 0% promotion ends, you'll be left with the full balance at 20.9%?
    "A child of five could understand this. Fetch me a child of five." - Groucho Marx
  • Paulgonnabedebtfree
    Paulgonnabedebtfree Posts: 2,740 Forumite
    edited 4 June 2010 at 6:53PM
    CannyJock wrote: »
    So the existing balance you have with Egg is at the 20.9% rate? Doesn't this just mean that if you take the BT offer, then between now and mid November when the 0% promotion ends, you'll be paying down the 0% transfer and your standard rated balance will be incurring interest? Once the 0% promotion ends, you'll be left with the full balance at 20.9%?

    Sorry CJ. I didn't explain very well. In fact I explained very badly :D. I currently owe Egg about £7k and all of it is at 6.9% LOB. That's why I have been hesitant about transferring £3kish until early November because of the risk of contaminating the LOB deal. However, it looks like around November/December time, shortly after the 0% portion (if I choose to make the transfer), reverts to SVR (20.9ish%) payments made by me will all go towards the higher interest part of the debt. The main reservation I have is that it is possible that only the money that is over and above a minimum payment would be offset against the higher interest portion. Either way it may now be worth me taking a chance on it - especially as I have some debt elsewhere at 26.9%. Most of my debts are on lowish LOB deals and I'm trying to do the best I can with the rest of it.
    If it turns out that only debts that are above the minimum payments are used to pay down higher interest portions of debt, I do hope that the credit card companies stop reducing direct debit payments when someone makes an additional payment.
    My situation is not good but I'm all for making the best of it.
  • CannyJock
    CannyJock Posts: 3,838 Forumite
    Combo Breaker First Post
    I currently owe Egg about £7k and all of it is at 6.9% LOB. That's why I have been hesitant about transferring £3kish until early November because of the risk of contaminating the LOB deal.

    Ah, that makes a lot more sense now ;) I'd transfer any high interest to this card at 0%, and even though I'd be paying down the 0% debt between now and then, it'd still save money - especially since the 0% amount is the only part that will revert to the 20.9% rate if I'm understanding you properly. There is the slight gamble that the 20.9% becomes the amount that's paid off come January 2011, but seems like a reasonable gamble with the current information.
    "A child of five could understand this. Fetch me a child of five." - Groucho Marx
  • CannyJock wrote: »
    Ah, that makes a lot more sense now ;) I'd transfer any high interest to this card at 0%, and even though I'd be paying down the 0% debt between now and then, it'd still save money - especially since the 0% amount is the only part that will revert to the 20.9% rate if I'm understanding you properly. There is the slight gamble that the 20.9% becomes the amount that's paid off come January 2011, but seems like a reasonable gamble with the current information.

    That's the way I'm starting to think as well. That 6.9% LOB portion is guaranteed from what I understand - subject to the usual stuff about making the payments when I'm meant to. I have a DD set up to ensure that though so - as long as my income holds up (I'm self-employed), there should be no problem. No business is totally recession proof of course, but it seems to me that being a sole trader at window cleaning, with a wide spread of domestic and commercial work types, I have been cushioned from recent economic stress better than most. No room for complacency though. Frugal living and paying my debts down before interest rates rise too much is the way forward for me at the moment.
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