Need Balance Transfer Advice - 0% or 6.9% ?

andyslowrider

Hi,

I recently opened a Barclaycard Credit Card with the intention of transferring approximately £3.3K (plus 1.9% handling fee) onto their advertised 0% for 13 months offer.

The balance is currently on Capital One and Halifax cards at approximately 23% APR.

When I activated the card I was told that I also have the option of a 6.9% fixed rate for the life of the debt. I am now not sure which is the best option.

In either event I expect that I will only be able to pay the minimum repayment each month of 2.25% so will still have a considerable balance in a year's time.

My first thought is that I should go with the 0% and move the balance when the 0% expires. This is fine except that my credit history is somewhat shaky (I was surprised to be accepted for this card), although I am trying hard to improve my credit ratings, and I am therefore concerned that I may not get accepted onto another 0% / low rate in a year's time. I also, of course, have no idea what the credit market will be like in 13 months.

My maths skills aren't great, but I reckon that at 0% the balance would have reduced by around £120 more than it would at 6.9% over the 13 months before reverting to the currently advertised rate of 16.9%(taking into account handling fees and assuming only minimum payments at 2.25% of balance).

So, what should I do? Should I take advantage of the 0% offer but risk the interest rate rising to at least 16.9% in a year's time, or should I go for the 6.9% but have the certaintly that this rate will exist for as long as I need it?

I would be very grateful for your thoughts.

Andy

YorkshireBoy

I think you've analysed the situation very well indeed.

One thing to bear in mind is that even if you do manage to secure a new 0% card every year you'll almost certainly pay a circa 3% fee for the privilege...so the 'cost' of going with the 6.9% APR LOB deal is only circa 4% per year going forward.

So, the price of 'peace of mind' is very low?...and certainly a lot lower than any loan you could get if you chose to go that way instead.

Tixy

I'd go with the 6.9% LOB from the info you have given. As even if you are successful is keeping tarting to a new balance you will have to pay a BT fee each time or around 3% of the balance. It makes the 6.9% offer even cheaper if you factor in a couple of additional BT fees.

scott_lithgows

I have about 3k on life of balance cards.Nothing to stop you having a LOB card then using 0% deals for part of your LOB balance,then if you dont get accepted its not the end of the world.

andyslowrider

Many thanks for your input - I agree that the 'life of balance' seems to be the way to go.

Incidentally, and frustratingly, Barclaycard have not made a good start. When I was told about the 6.9% LOB offer I was told by their call centre representative that there was no transfer fee - their web site says differently and I've just payed 2.5%. Why can these companies never manage to provide accurate and professional customer services support?