Need a bit of help

Nicky321

I recently did a money transfer to clear a halifax OD which I was paying £62 per month on and the debit balance was not reducing. I thought this MT was on 0% until 12/11 however I have found out it wasnt and I will be charged at 20.6%, (still thinking i am better off because at least the OD is cleared and I now pay capital and interest off the Credit Card.

My question is

Current balance £7,637.07 made up of
Original balance £4049.07
Money Transfer £3450.00
Money Transfer fee £138.00

The original balance is on 18.65% and the MT and MTF are on £20.6%.

My statement shows the minimum fee of £83.87 per month now, before Transfer it was £73.38.

I was originally paying the £73.38/month and will pay a minimum of £62.00/month off the new balance, total payment to be made £135.38.

The monthly payment £135.38 will go to paying off the part of the outstanding balance with the highest APR first.
How would I enter all this on my SOA and snowball calculator. Would I put them as 2 separate debts as they are on 2 different rates?

Tixy

Hi

Your card provider will allocate all of your capital part of your payment off the debt with the highest APR. There isn't an exact way to put this on the SoA or snowball (as far as I know). I think people often calculate an average APR - 19.57% at the moment on your figures.

Although as time goes on and you repay more of the capital the average APR will slowly reduce, so you will actually pay slightly less interest that the snowball would say.

I would say the average APR was accurate enough for most calculations though, as of you pay £135.38 each month it will take 100payments (over 8years) for the APR to drop from 19.57% to 18.65% (when you'd only have the original balance left) .

Nicky321

Tixy wrote: »

Hi

I would say the average APR was accurate enough for most calculations though, as of you pay £135.38 each month it will take 100payments (over 8years) for the APR to drop from 19.57% to 18.65% (when you'd only have the original balance left) .

Thanks Tixy, however you have left me a little confused :doh: Originally I had put it with other debts on the snowball calculator and entered it as two separate debts, one at 18.65% and the other at 20.6% and it said I would clear the debt by snowballing in 36 months. Will it have a greater impact with it clearing the higher APR first?

Tixy

The figures I had shown assumed you kept only paying the £135 every month. I guess on your snowball at some point you must start paying off a lot more than that to this debt?

On the method where you entered it as 2 debts what minimum payment percentages have you put in the snowball calculator?

Nicky321

Its ok, think i confused myself lol :doh: I forgot I was actually snowballing and therefore as the debts lower more will be paid off the remaining ones.

Nicky321

Tixy wrote: »

The figures I had shown assumed you kept only paying the £135 every month. I guess on your snowball at some point you must start paying off a lot more than that to this debt?

On the method where you entered it as 2 debts what minimum payment percentages have you put in the snowball calculator?

I put the original min payment £73.78 on account 1 and then the minimum payment £62 on account 2

Tixy

To get an accurate snowball its best to put the minimum payments of any cards as the actual minimum payment percentage (as per the T&C) they way you are doing it assumes that the minimum stays at £135.78 even when the balance is only half what it is now, which could mean the snowball is assuming you need to pay more to this debt than you really need to, and that money might be better used on a higher rate debt.

If you do it your way with round figures it will give you a slightly worse scenario than you could get.

Nicky321

Thanks Tixy, will have a look through the websites for the credit cards and hopefully will work out the % payments. Unless anyone knows them and wouldnt mind telling me? Barclaycard simplicity, Egg Money, Cahoot loan (min £50) and Virgin Credit card.

Tixy

Assuming not taken out in the last couple of months they should be be virgin 1% (of the balance), barclaycard 2.25% (I think) and Egg 2% (I think egg money will be the same). Have a quick check on your last statements to see if that works out right.

MBNA have started putting up the percentages on their existing cards but I'm not sure if Virgin are the same, haven't seen any reports that Virgin are changing old cards %s yet. (A new ruling has meant that new cards must pay back at least 1% plus any interest charged and MBNA/Virgin cards have traditionally been less than that). But keep an eye on your virgin statements in case they do change theirs soon.

Nicky321

Thanks Tixy, will check them now.

Nicky321

Ive looked at Barclaycard and yes it is 2.25%, I remember Virgin saying it was 1%, Egg is 2% but I cannot work out how they get the min repayment figures because them % work out less than they ask for :S