maths assistance on balance transfer - PLLEASE

zaksmum73

please can someone better with numbers help me out with some maths /advice please?

I have a V1rgin card with £0 balance and £25k credit limit - they've just offered me a 0% balance transfer deal up to Nov 9th 2012. 5% handling charge

I owe £2388 to Ll0yds credit card, 29% apr - I pay the minimum each month
I owe £5355.15 to Hal!fax credit card,again 29% apr
I also owe £3619 to M1NT on 26% apr - pay the minimum each month on both of these

So, I presume it's good for me to move all this over to the V!rrgin card, to get the 0% for 12 months?? THis will allow me to continue to pay the same amount each month, but reduce the debt more won't it?? Even WITH the handling fee factored in?

I'm sorry for being so amazingly incapable of doing the basic maths, but I am incredibly stressed out for one reason or another and just cannot get my head around this at the moment
Any advice greatly appreciated

Tixy

Hi

If you can only afford the minimum payments then it will work out a lot cheaper - the transfer fee will be £568 - and that will be the only charge for 12months. The only thing to consider is 1) what the APR will go to after Nov 12 - if it was a lot higher than 29% and you ended up being unable to transfer again then you could lose out on the savings you make in the first year (but I'd be surprised if the standard APR is higher than your other cards).

You'll probably find the virgin card minimum payment is lower than what you are paying on your other debts - its probably 1% which will be £119 a month - but I'd advise you to pay more than the minimum each month.

Also keep an eye out for virgin rate jacking your standard rate whilst you are still on a 0% deal - you'll probably still want to opt out as you are likely to still have a balance on the card at Nov 12.

Cat2011

yes I think you'd be better off doing the transfer, as effectively instead of paying 29% interest per year, you'll pay 5% (the BT fee). Just ensure you can do more than one transfer. Tho your situation would still be improved if you could only transfer one.

One thing to check is the min repayment. If all your current cards are a minimum 1% repayment, your virgin card might be 2.5% repayment. If you can only afford to pay the minimums at 1%, you might be in for a shock if your repayments suddenly more than double. So do check how much you'd be repaying each month.

mildredalien

If you transfer all of these balances over to a 0% card, whatever you pay towards the card each month will go towards paying the actual balance of your debt off, whereas if you pay minimum payments to the above balances, the majority of what you pay just covers the interest. So overall you can pay more off your balance when paying 0% interest than when paying 26% interest. Even with a 5% handling charge you should end up paying more.

Putting your Lloyds card into a credit card calculator, if you pay 5% as the minimum, you pay off £119 per month but £54 is added on as interest, meaning you only actually pay off £65 of the debt. If you pay 2% of the balance, more interest is added on than you pay off, and you will NEVER pay the card off. If you were to pay off 5% minimum balance, it would take 143 months to pay off. If you paid 5% minimum balance on a 0% card it would take you down to 82 months to pay it off.

I would attempt to pay as much as humanly possible towards those debts while you are at 0% interest to take full advantage.

DVardysShadow

Your interest on all these debts will be getting on for £3000 over a year. The offer gives you the credit for just £570 for that year. A bargain. I would take it. It only works against you if the balance transfer goes somewhere over 26% - but the breakeven is still some years ahead.

If you are currently paying the interest and a little more, this year will give you a chance to knock down your debt if you pay at the same level. However, if you are not meeting the interest payments on this at the moment, I would say you need to start thinking of more drastic measures such as a DMP, IVA or bankruptcy.

MrGreen

As people have said above it a good offer for you and worth going for.

I'd add that you should pay off at least the current total of your min payments, don't think it time to rest as it's on 0%, by having this lower interest /transfer fee you can actually make more of an impact on reducing the amount you owe.

If the rate is the same and the option is available for you to transfer into your current account then you could do that and make the payment to all your cards from there.

Make sure you have a Direct debit set up with Virgin to take the min payment, just so there are no mix ups and they cancel the 0% transfer offer for missing a payment

zaksmum73

Thanks everyone (as ever) for sound advice
I contacted V1rgin and discovered that the minimum payment is 1% and when the deal ends, the APR will be 26.7%. I've arranged to transfer all my other c card balances over (which I currently pay £300 per month for) and have set up a DD for the minimum amount to v1rgin each month that I WILL then top up to the £300 I have already been paying. This will help me shave some off the balance over the 0% period and there'll be months I can pay more off, thats for sure