Can't get my head around the maths!!

thriftychick

I have just been sent a new M&S card which was offering 0% on balance transfers and purchases (or so I thought)! I have a £3,000 overdraft which I was planning to "pay off" using a cheque or balance transfer with the new card. I have now been told that they are not offering 0% on purchases, they don't issue cheques and don't do balances transfers into current accounts.

I now feel sick.

I am paying 15.53% on overdraft (1.21% per month), I am in debt for 20 days of the month. I have been offered a 6 months 0% cheque by Barclaycard but the fee is 2.5%. I have £500 per month allocated to pay this debt off. Can't get my head around the maths on this!!

Can anyone help me?

moozie_2

Hi there

Maths is not my strongest point as Southernscouser may tell you but if I worked this out right, you are paying over £36 interest on your overdraft every month at the moment.

The BT with Barclaycard will cost you £75 (one off fee). What interest are they offering you? It may be worthwhile doing depending on how much lower than you current interest it is.

Hope this makes sense!

tyllwyd

Moozie's figures look right to me.

You say that you have £500 available to pay this debt off? So if you do nothing, in six months you would have paid £3000 plus extra for the interest, so I guess it would be paid off in about seven months?

I'm not good with the maths on these things either, but if you paid £36 interest for the next six months, that would be £216 (although in fact it would be less as the balance would be coming down - I tried to work it out a bit more accurately but tied myself up in knots!).

So you are comparing £75 plus whatever interest on the Barclaycard would be (how long does the 0% offer last?) against something like £216 over six/seven months.

thriftychick

The Barclaycard cheque is for 6 months (I have just edited my original message). I aim to pay it off in the 6 months either way but as my current account goes into credit for 10 days for the month I wonder if it would be £216? They must work the interest out daily? Thank you for your help.

tyllwyd

I agree that it should be less than the £216 but it is beyond me to work out how much! How much interest did you pay last month? I'd guess that the Barclaycard is probably slightly better than leaving the overdraft as it is, but if you can throw money at bringing the debt down, there might not be as much of a difference as you might expect.

CLAPTON

over draft and credit card interest is nearly always calculated on the daily balance, presumably you could look at last months statement and see the interest added (sometimes it shows the fprevious month's interest) .in any event you shoudl be able to see approximately waht you are paying now.

although only approximate if you have 3000 of debt and intend paying the amount off in six months then the total interest will be approximately equal to (this month *6 divided by 2 ) or (this months times 3)
so if you are paying 30 this month then say the total will be 30*3=90

as the balance transfer fee is 75 then is all pretty marginal.

are you sure that the M&S card doesnot give 0% on purchases? if it did you could of course simply use it for most of your purchases so reducing your current a/c spend and hence your overdraft.

thriftychick

My overdraft is as a result of paying off a 0% card that had come to the end of its period and new card took so long to come through. I haven't paid any interest yet. I phoned M&S to check on purchases and they said it was for cards applied for after 1st Sept!

If it is going to be only marginal then I think psychologically it would be better on the Barclaycard.