Please help me shoose between these two transfer rate offers.

Ally1205

My first post here, on this excellent site. :T I have read the main article on reducing cost of debt prior to posting this. I'd much appreciate any input/advice on this decision which has had me stumped for many days:

After buying a house with cash I find myself £7,000 in the red, which is now on the credit card issued by my current-account provider, charging me about 15% APR. I've been offered a choice of 2 different balance transfer rates on my Barcleycard: 6.9% (until paid off in full). or 0% (for 12 months). £7,000 is just within my credit limit on this card.

But which offer should I choose? If I could be fairly sure that I'd get
another 0% offer soon after the first one expires, ad infinitum, I'd go for the 0% offer.

But what might the future hold regarding cc transfer offers and rates? Could future 0% offers from CC companies become scarce before the coming 12 months expires? If so, I'd probably be better off with the "6.9% till paid off" option, yes? Having the "6.9% till paid off" option would give me a little extra certainty about where I stand, in that I don't have to worry about where the next offer might come from and what the rate will be.

There is another factor to consider: I currently have about 8 credit cards, most of which I don't use, except in a small way, just to keep the accounts alive. I think I'll cancel three of these which have a very low credit limit. Since I originally got my cards, I have been unable to work so much, due to a long-term disability. If the CC companies find out that my income has diminished, they may lower the limits on my cards, yes? I'm currently recovering from an injury and my income is very low, so I guess it's not a good time to apply for other cards, but actually, I shouldn't need to, as the offers I mentioned above do cover my needs. If my card providers find out my income is so low at present, that could perhaps weaken my credit rating and make it more difficult for me to get 0% transfer rates in future - so I might be better off going for the "6.9% till paid off" offer. What do you think?

There is just a chance I may be able to raise the capital to pay off the debt in full during the coming 12 months, but that is not at all definite.

Thank you very much for your input.

A

redpete

How much would you be able to afford to pay off the card each month?

stephane_2

If you are not able to repay debt within 12 months then I would go with Barclaycard and if in the future you are able to find a better deal then you can always move it. If you decide to move debt to 0% offer you are not gauranteed to find another deal or you might find that Barclaycard offer won't be available. At least with Barclaycard offer you know where you stand, set up a direct debit and see you debt shrinking without having to worry....

Ally1205

redpete wrote: »

How much would you be able to afford to pay off the card each month?

Only the minimum amount, until such time as my earnings improve again, which may not be for several months or even a year, for all I know.

Thanks,
A

Ally1205

stephane wrote: »

If you are not able to repay debt within 12 months then I would go with Barclaycard and if in the future you are able to find a better deal then you can always move it. If you decide to move debt to 0% offer you are not gauranteed to find another deal or you might find that Barclaycard offer won't be available. At least with Barclaycard offer you know where you stand, set up a direct debit and see you debt shrinking without having to worry....

Thanks, but I perhaps I didn't explain the situation clearly enough. I have two offers from Barclaycard: one is 6.9% till paid in full; the other is 0% for 12 months. I am trying to decide between these two offers. Whichever I settle for, I will set up a DD for the minimum payment.

A

chattychappy

Something to bear in mind is BT fees. I think Barclays might be 2.5%, 3% is more typical and they can be higher.

The thing about the 6.9% LOB deal, is you are only paying the fee once. With 0% deals, you are paying the fee each time. A fee of 3% every 12 months for a 0% deal is still not bad, but it looks less good if you're stuck with paying 3% for a 6 month deal, or a non-0% deal.

If you have no problems getting credit then I'd take take the 0% deal. If you have an MBNA card, then try to keep that down to zero balance. They're pretty good at coming back with deals.

For "peace of mind", I'd take the 6.9% deal.

What about applying for a new 0% BT card? Transfer whatever you think you can pay off within the promotional period to that one, and the rest to the 6.9% LOB Barclays offer (allowing for the minimums on that one too..)

Ally1205

chattychappy wrote: »

Something to bear in mind is BT fees. I think Barclays might be 2.5%, 3% is more typical and they can be higher.

The thing about the 6.9% LOB deal, is you are only paying the fee once. With 0% deals, you are paying the fee each time. A fee of 3% every 12 months for a 0% deal is still not bad, but it looks less good if you're stuck with paying 3% for a 6 month deal, or a non-0% deal.

If you have no problems getting credit then I'd take take the 0% deal. If you have an MBNA card, then try to keep that down to zero balance. They're pretty good at coming back with deals.

For "peace of mind", I'd take the 6.9% deal.

What about applying for a new 0% BT card? Transfer whatever you think you can pay off within the promotional period to that one, and the rest to the 6.9% LOB Barclays offer (allowing for the minimums on that one too..)

Thank you for the input. Yes, I had considered the transfer fee. I constructed a spreadsheet which calculates various likely scenarios. However, it seems difficult to predict how available these 0% offers will be in a year's time. It becomes even more impossible in my case, bacause I'm not sure about my money-earning abilities in the future. If I state my actual earnings, it's bound (I would have thought) to limit the amount of credit these cc comapnies will offer me.

I have loads of equity in my house (£160K), but that doesn't seem to have any bearing on all this.

Yes, I do have an MBNA card, and yes, it is at £0 balance. I'll keep it that way as you suggested. Thanks for the tip. However, a year is a long time, and MBNA's policies might change completely within the next year - wouldn't you agree?

As for applying for another 0% rate card, why should I dod this, when the Barclay offer seems so good (0% for 12 months)? I'm also thinking: (a) now seems a bad time for me to apply because of my low income, and (b) That would be adding another card to my stack of 8, which would be bad for my credit rating. (c) If they turn me down after their credit search, that would damage my rating and also give me nothing of benefit in return for the setback. Your comments would be welcome. Thanks for your valued input.

A

chattychappy

Ally1205 wrote: »

As for applying for another 0% rate card, why should I dod this, when the Barclay offer seems so good (0% for 12 months)?

My idea was you'd take up the Barclays offer for the 6.9% deal and another card for the 0% deal. The idea is you put the amount you can afford to pay off within the next year onto the 0% deal (assuming its a 12 month offer) and the rest onto the 6.9% deal. Barclays might allow you to use both deals at the same time - but the problem of this is you can't control the allocation of repayments. (They'd probably allocate to the 6.9% balance first, which might not be what you want.)

Ally1205 wrote: »

(a) now seems a bad time for me to apply because of my low income, and (b) That would be adding another card to my stack of 8, which would be bad for my credit rating. (c) If they turn me down after their credit search, that would damage my rating and also give me nothing of benefit in return for the setback. Your comments would be welcome. Thanks for your valued input.
A

Agree with (a). (b) not necessarily. (c) - 2 or 3 searches every 6 months isn't a problem and only the search is recorded, not the outcome.

So no easy answer! How long has Barclays given you to decide? If you've got time, I'd stick in a new app. If it fails, then put it all on Barclays at 6.9%. You've got some peace of mind then - the security of knowing that the deals not going to run out and you'll have to fish around in desperation.

Yep MBNA could change their policy. I just had a purchases offer which I've never had before. But for years I've been getting BT offers and would be surprised if they stopped.