The Best Balance Transfers article discussion area

Moggles_2

Originally Posted by matrix999
Mum has a personal loan with Egg at the moment with an APR of 7.9% and outstanding balance of approx £3500. The original loan amount was about £5500 over 72 months.
Does anyone have any suggestions as to ways to save interest on the remaining amount outstanding?
I thought about a LOB transfer or a 0% offer but i'm unsure as to how to pay off a personal loan with a credit card 0% and LOB transfer???

You can shift a credit card balance to another credit card. Transferring a loan to a credit card is not so straightforward. Only a few rather special cards, like Egg Money and cards issued by MBNA, have this capability.

If your credit report will stand it, then the best approach would be to apply for two credit cards. Pick a decent 0% BT card, like NatWest for instance, and route it through an Egg Money card to your bank account. In other words, use the 0% BT card to ‘pay off' the Egg Money card. (Natwest will charge a 2% handling fee for this.) The Egg Money card then has a positive balance and this money can be moved into your current account. You now have cash in your bank account equal to the balance on the 0% BT card and can pay off your Mum's loan.

Alternatively, 0% BT cards issued by MBNA periodically issue credit card cheques which can be paid directly into your current account or you can request a transfer of funds to your bank. There's a 2.25-3% handling charge, depending on the card.
Caution: IMO, it's best to request the transfer by phone, so you can check the 0% offer will apply. Otherwise you may be charged for a money transfer, which is very expensive!

The risk in paying off a loan this way is that you can't be sure of another 0% credit card offer in X months time when the current 0% deal ends and the interest rate jumps to anything from 23.9% APR or higher. :eek:
If this worries you, consider a low rate or life-of-balance deal such as the Goldfish or HSBC offerings in conjunction with Egg Money rather than an MBNA 0% BT card.

Also, you'll need to check the loan Ts & C's. Some lenders charge an early repayment penalty if the loan is settled in full before the scheduled date.

Moggles_2

Hi Chichiuaua

Congratulations on landing a new job (& payrise) & welcome to the Credit Card board!

I want to transfer my balances onto a credit card with 0% offer (all I need is two months!!!) but every credit card I have applied for has turned me down. I have no idea why as I have been living off credit cards all my life and been their best friend but now they are forsaking me in my hour of need!

Have you looked at your credit file lately? This is the information potential lenders see when you apply for a new credit card, so it's worth checking whenever you're rejected. Mistakes do happen. (For help, see the *How to obtain credit reports* sticky.)

I have tried Virgin & MBNA - both said no straight away...

Virgin is underwritten by MBNA, so it may be that MBNA scores applicants for both cards in much the same way. I would steer clear of cards issued by this lender for a bit.

I'm off to read the credit rating threads as recommended above.

Sounds good to me.

Best of luck
M

matrix999

Moggles wrote: »

You can shift a credit card balance to another credit card. Transferring a loan to a credit card is not so straightforward. Only a few rather special cards, like Egg Money and cards issued by MBNA, have this capability.

If your credit report will stand it, then the best approach would be to apply for two credit cards. Pick a decent 0% BT card, like NatWest for instance, and route it through an Egg Money card to your bank account. In other words, use the 0% BT card to ‘pay off' the Egg Money card. (Natwest will charge a 2% handling fee for this.) The Egg Money card then has a positive balance and this money can be moved into your current account. You now have cash in your bank account equal to the balance on the 0% BT card and can pay off your Mum's loan.

Alternatively, 0% BT cards issued by MBNA periodically issue credit card cheques which can be paid directly into your current account or you can request a transfer of funds to your bank. There's a 2.25-3% handling charge, depending on the card.
Caution: IMO, it's best to request the transfer by phone, so you can check the 0% offer will apply. Otherwise you may be charged for a money transfer, which is very expensive!

The risk in paying off a loan this way is that you can't be sure of another 0% credit card offer in X months time when the current 0% deal ends and the interest rate jumps to anything from 23.9% APR or higher. :eek:
If this worries you, consider a low rate or life-of-balance deal such as the Goldfish or HSBC offerings in conjunction with Egg Money rather than an MBNA 0% BT card.

Also, you'll need to check the loan Ts & C's. Some lenders charge an early repayment penalty if the loan is settled in full before the scheduled date.

Thanks for the superb reply!!!

Got one more question, I note that you say there is a charge of 2%-3% to do the balance transfer etc... Is there an upper limit they have that capped at as its going to cost approx £105 to transfer £3500 to a card that charges 3%.

SherbetMan

My Morgan Stanley interest free period is coming to an end, I still have £2200 to pay. Am I best heading for the Natwest deal at the moment? Am wanting about a year with cheapest BF. How long is it taking for funds to be transferred?
Is it worth my while going through one of the cash back sites to see if I get any points. Think Pigsback link with Natwest?

genfink

I have a hypothetical question, and it may be stupid but please humour me!
If i were to open a NatWest credit card in order to take advantage of 13 months 0% interest on balance transfers, and subsequently transferred my current HSBC credit card debt of about £150 onto it, could i then spend some more money on the HSBC card, and then transfer that balance onto the NatWest card too?

I know the sensible idea would be to do the spending on a 0% interest card but i 'm just wondering if it's possible to make more than one balance transfer to a card?

Basically i want to stop paying interest on my current debt so want to do a BT before i do any more. But also want to book a holiday next month which will be booked with a credit card - what shoudl i do?

Thanks
Genfink

Moggles_2

Originally Posted by cooldudecol
Does anyone know of any credit cards offering BTs at 0% for 12 months, that have a reputation of accepting people with poorer credit ratings?

Well, it depends what you mean by "poorer credit ratings" If, for example, you have a recent history of late payments on your existing cards, a 0% BT for 12 months is probably not an option TBH.

Lenders launch these 0% promotions, which are sometimes heavily advertised, to draw in new customers. Often they are flooded with applications and can afford to cherry-pick applicants. They are all going to see a poor payment history in a bad light.

That said, there are many other reasons why someone's credit rating may be less than perfect. Of the current BT cards, I would give Natwest a go, though you may be handed a low credit limit. This deal offers 0% for 13 Months. There's a 2% handling fee.

If you're unsuccessful, there are several low interest rate deals which could save you money. Currently, Barclaycard is offering 5.9% for the life of the balance with no fee. (Please see #473 above.) For further suggestions, have a look at Martin's *Credit Card Shuffle* on the main site.

Moggles_2

Originally Posted by matrix999
I note that you say there is a charge of 2%-3% to do the balance transfer etc. Is there an upper limit they have that capped at, as its going to cost approx. £105 to transfer £3500 to a card that charges 3%?

Most balance transfer fees are not capped, but there are exceptions. Deals with capped fees work in your favour when you have a largish balance to transfer, but you can still save money when shifting sums of £2500 plus.

Currently, the longest 0% period available is 9 months. See Citi Platinum Mastercard, BT fee capped at £75.
The John Lewis card offers 0% BTs for 6 months, fees capped at £50.
(On the other hand, you could shift a balance of £3500 to Natwest and have 0% for 13 months for £70.)

There's only one card in the MBNA stable with capped fees at the mo [See #523]
(If you're considering this route and want to maximise the 0% period, 15 months is currently available from Virgin for £105).

Hope this helps.

stephen25uk

i recently applied and got the rbs classic card 0% for 13mnths £4900 credit limit...more than enough for my needs..give them a go

YorkshireBoy

Moggles wrote: »

There are no cards in the MBNA stable with capped fees, AFAIK.

http://uk.virginmoney.com/vaa-amex/

2% (max £50), although only for 6 months.

Moggles_2

Originally Posted by SherbetMan
My Morgan Stanley interest free period is coming to an end. I still have £2200 to pay. Am I best heading for the Natwest deal at the moment? Am wanting about a year with cheapest balance transfer fee.

Lowest BT fee at the mo would be the Capital One Platinum deal with 0% on balance transfers and purchases until 1 August 2008. A 1.7% handling charge applies.

Btw, the Capital One Balance Transfer card offers 0% on balance transfers only (purchases 15.94% pa) with no BT fees, but only until 1 April 2008. Still, well worth considering IMO.

If you're already a C1 card holder, then Natwest, as you say, offers 0% BTs for 13 months from account opening. A BT fee of 2% applies.
One point to watch for is Natwest's practice of charging interest on the BT fee (See #481 above).

How long is it taking for funds to be transferred?

These introductory 0% deals are heavily advertised and lenders are sometimes flooded with applications. Best practice is to allow 5-6 weeks but, with luck, your application and balance transfer will be processed in 2-3 weeks.

Is it worth my while going through one of the cash back sites to see if I get any points. Think Pigsback link with Natwest?

Definitely. This reduces the cost of the BT still further. I've never used Pigsback though, so can't help you there.