Make Free Cash from Credit Cards - Janet & John Instructions

Galstonian

I'd just like to reiterate that you do need to take care.

Make sure you understand the terms and conditions of any offer you take up.

Ensure that you always make minimum repayements on time throughout the offer (I always set up a direct debit).

Ensure that you know exactly when offer periods end (this may not coincide with a statement or payment date). If you have online access you can set up a payment from savings to current account and from current account to credit card in advance.

Best of luck.

xxclarossxx

I understand how the money gets to the savings account etc and that the lump sum is repaid at the end of the interest fee period BUT before i start, do you pay the minimum monthly payments out of the savings account where the balance is, effectively paying off the debt from the now 'credit debt' or just from a current account?

Reaper

Detail_Merchant wrote:

A slight correction. I've done all my Virgin BTs except for the first via their web-site, so similar to Egg there.

Thanks for that. I stand corrected.

xxclarossxx wrote:

do you pay the minimum monthly payments out of the savings account where the balance is, effectively paying off the debt from the new 'credit debt' or just from a current account?

Entirely up to you. I try to pay the minimum amounts out of salary to boost my savings, but many prefer to take it out of the money they got from the card so that it is not costing them anything.


Finally as Galstonian says there are little tricks and traps to look out for and the danger of a simple explanation is you might not spot them. If you want a comprehensive explanation of all this I suggest you look at https://www.stoozing.com and always read the summary box they provide with your credit card to make sure you understand the key terms.

Paul_Herring

Grumpy_Old_Duffer wrote:

So, if you have to pay a minimum (£5) a month and you hold the Card for 9 months that has cost me £45!!!

No - it has cost you nothing. You are repaying the capital you have borrowed, so at the end of an initial £3000 (e.g.) borrowed, you will only owe £2955.

If the Balance Transfer was for £3,000 and I could earn 5% p.a. that would mean I have earned (approximately) £3,000 x 5% = £150 p.a. or about £112.50 for the 9 months less my monthly payments of £45 = £67.50.???

Assuming
1) you're a basic rate tax-payer
2) using simple interest (not compounded) at 5% (makes the calculation simpler)
3) you pay the £5 out of a current account (or anything except your 5% savings account)
4) you won't get exactly 9 months (transfer times from card -> savings and back again at the end of the period - I've assumed 2 weeks)

£3000 x 5%(interest rate) x 80%(basic rate)/12 (months) x 8.5(months) = £85

At the end of all this, you repay what's left of the balance (which was never yours to begin with remember!) on the card (£2955) from your savings and you're about £85 richer. And if you followed (3) above, you'll have £45 spare that you've paid out elsewhere to cover the capital for a lump sum of about £130 in your savings account.

Grumpy_Old_Duffer

I think I'm now beginning to understand the principle of how this all works.

Assumption:
Balance Borrowed at 0% interest = £10,000
Minimum Monthly Payment to Credit Card Co. = 2% of Balance
Minimum Monthly Payment paid from Balance.
Gross Rate of Interest on Savings Account = 5.0% p.a. (say, 0.42% monthly compound)
Income Tax @ = 22%

.......................(Nrst. £)........(Nrst. £)
End of :..........Min Payment......Balance......Gross Interest.....Nett Interest
1st Month..........£200..............£9,800...........£41.16.............£32.10
2nd Month.........£196...............£9,604...........£40.34.............£31.46
3rd Month..........£192..............£9,412...........£39.53.............£30.83
4th Month..........£188..............£9,224...........£38.74.............£30.22
5th Month..........£184..............£9,040...........£37.97.............£29.62
6th Month..........£181..............£8,859...........£37.21.............£29.02
..............................................................Total Interest = £183.25

...... & I now pay off the £8,859 balance (or transfer to another 0% card) and pocket the £183.25????? Cancel Card and start again with a new card!!!!

As I have a 'One Account' I assume the best thing to do is have the money 'Bank Transferred' from the Credit Card to the 'One Account' (for the higher Interest Rate & reduction in Mortgage period) and also set-up the Direct Debit for the Minimum Monthly payment from this account. This way I get the interest Gross???!!!!!

But first I need to 'officially' cancel all my Credit Cards that I don't use and reduce the Credit Limit (which is way over what I have ever needed) on the one Credit Card that I do use.

Just a thought ..... as the Credit Card I do use is Goldfish can I pay the Minimum Monthly Payments on this and gain the points for the 'Retail' vouchers???!!!

Reaper

Yes, you got it. Offset savings such as those with the Virgin One as ideal for this sort of thing as you effectively get the interest gross, so yes you will make/save even more money than your figures suggest.

As for paying the minimum payments off one credit card using another credit card - it doesn't work. The only way to do this would be with a cash advance and that's a bad idea. Lots of nasty charges and it might not even qualify for points.

If you want another sneaky trick them some people, when they have paid the 2% (or whatever) minimum amount, then go on to balance transfer it off again to their bank account. Of course you need to check the card you are using won't charge you any fees for additional balance transfers. Personally I find it a bit too fiddly and don't bother. But if you want to maximise your return that will stop your balance declining over time.

Grumpy_Old_Duffer

As a 'Virgin Stoozer' I thought it appropriate to try this 'Money Making System' using a Virgin Credit Card, so today I applied on-line. Hope I get a high Credit Limit!!!!

Now, do I phone and ask for a Balance Transfer when I've been accepted, or when during the application do I ask for this to happen??

smartsaver

You can request a BT when you apply for the card otherwise wait until the card arrives and you call to activate it.

Good Luck!

Grumpy_Old_Duffer

Received my offer from Virgin this morning ..... £5K. The application form received does not include any Direct Debit form, so does this normally come with the card?

Now, do I send a covering letter back with the signed application form saying ".... please put the available balance (£5K) into my bank account no. xxxxxxxx and debit bank account xxxxxxxxx with the minimum payment of 2.5% of the outstanding balance each month" or do I just send the application form back, then when I receive my card, phone them and request the BT and Debit each month?


I did say I wanted 'Janet & John' instructions!!!!!!!!!

Galstonian

Some application forms include a section for BTs, some don't.

When your account is up and running I know MBNA envelopes contain a slip for BTs (even outside of intro periods) and they can also be done online or over the phone. Over the phone should mean you can immediately ask about fees though so maybe that would be the way to go?