money

sanya1995

my credit card has offered me 0% for 6 mths and 2.5% of transfer fees any suggestion that i can invest that money to get some returns
thanks for your suggestions in advance

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I assume that you mean that you would pay a £25 fee per £1K transferred.

In this case it is possible to beat that using your mini-cash ISA allowance, assuming you haven't used it in 2006/7. (Don't sacrifice this if you £3K of other savings sitting around elsewhere, however.)

National Savings did pay 5.3% before the recent interest rate rise (on a minium £1K investment) and I think that may be going up to 5.55%.

Assuming 5.55%, what profit are we talking about at the end of 6 months?

Half a year of 0.55% [=5.55% minus 5% because of the effect of the 2.5% 6 month charge] = £2.72 for a £1K investment and £8.17 for a £3K investment.

Is it worth your while? Only you can decide.

There is talk of a chance of a further Bank of England interest rate rise in February, which might help your cause in the final two months.

Clariman

sanya1995 wrote:

my credit card has offered me 0% for 6 mths and 2.5% of transfer fees any suggestion that i can invest that money to get some returns
thanks for your suggestions in advance

Personally, I wouldn't touch a 6 month 0% deal with an uncapped fee of 2.5% because it would be very difficult to make any money on it. Let's assume that you get a credit limit of £10,000. This will cost you £250 to transfer.

The best savings rate you will get at the moment is 5.45% AER which means you could earn £545 in interest before tax if the money was saved for a year. However, your card is offering you 0% for 6 months but by the time you get the money into your bank account and then get it out again at the end of the 6 months, you will probably have had it invested for about 5 months. £10,000 invested for 5 months in the top paying savings account will earn you £227.08 before tax. Assuming a standard rate tax payer, then you will get about £181.67 after tax which is considerably less than the £250 which you paid to make the transfer. Even if you put the money in a tax free ISA, then you still would not make a profit.

There are much better deals out there: either without BT fees (not many these days) or with capped BT fees. Although this 0% deal is not worth it, there are plenty out there that are and there is a good number of people earning about £1000 to £2000 by exploiting such offers.

There is even a name for this technique. It is known as stoozing. Martin has a discussion board about stoozing and he also sponsors the official stoozing website which I run with Stooz (the person who stoozing was named after). We maintain a table of the latest 0% Balance Transfer offer which can be found here..

Clariman

sanya1995

thanks for all the good advice