Stoozing - reaching limit in interest free period

mgarl10024

Hello,

I'm new to stoozing - so feel free to explain basics.

I've had a number of credit cards over the last 10 years, and always paid them off every month.
It then occured to me (largely after reading here) that I could take advantage of some interest free purchase deals out there. So, I signed up for Card A, which gave me a limit of £4000, with 0% until Oct 2012.

Being cautious, every month, I'm paying the same amount as what is being spent on the card into the best savings account I can find - so I'm sensibly racking up the debt.

My concern is that our spending on the card will likely be about 500-600/mth, so the 4000 limit wont be sufficient at this level of spending until Oct 2012.

So what to do?
- Do I wait a few more months until I have a few thousand on Card A, and then call Card A co and ask for an increase? (I plan to do this anyway, but am unsure of the timing - I guess waiting until it is maxed isn't a clever plan?). Is this increase likely? (I have a good credit record).
- If no limit increase, start up Card B well in advance - with another 0% deal (perhaps with a different company). But then at what point do I consider Balance Transfers - when I start up Card B but before Card A's 0% deal is over, or after Card B has been running for a few months, and when Card A's deal has come to an end?

Hope this makes sense. All advice appreciated.

Thanks,

MG

alexanderalexander

mgarl10024 wrote: »

Hello,

I'm new to stoozing - so feel free to explain basics.

I've had a number of credit cards over the last 10 years, and always paid them off every month.
It then occured to me (largely after reading here) that I could take advantage of some interest free purchase deals out there. So, I signed up for Card A, which gave me a limit of £4000, with 0% until Oct 2012.

Being cautious, every month, I'm paying the same amount as what is being spent on the card into the best savings account I can find - so I'm sensibly racking up the debt.

My concern is that our spending on the card will likely be about 500-600/mth, so the 4000 limit wont be sufficient at this level of spending until Oct 2012.

So what to do?
- Do I wait a few more months until I have a few thousand on Card A, and then call Card A co and ask for an increase? (I plan to do this anyway, but am unsure of the timing - I guess waiting until it is maxed isn't a clever plan?). Is this increase likely? (I have a good credit record).
- If no limit increase, start up Card B well in advance - with another 0% deal (perhaps with a different company). But then at what point do I consider Balance Transfers - when I start up Card B but before Card A's 0% deal is over, or after Card B has been running for a few months, and when Card A's deal has come to an end?

Hope this makes sense. All advice appreciated.

Thanks,

MG

I think you might be fretting a bit too much about this – as long as you have a spotless credit history (and it sounds like you do) and a reasonably decent income (your gross income should be at least twice what your proposed total debt will be), you shouldn't have problems getting new 0% credit card deals or a credit limit increase, even if you apply for a couple of cards in quick succession. Just go for whichever of the above is most convenient for you.

alexanderalexander

PS is your current card M&S? If so, I get the feeling that 4k might be their standard initial limit for everyone (a few seem to have been given that, including me, on this board) as opposed to the maximum they consider you creditworthy for, so that would imply they might be receptive to a request for an increase.

shiny76

alexanderalexander wrote: »

PS is your current card M&S? If so, I get the feeling that 4k might be their standard initial limit for everyone (a few seem to have been given that, including me, on this board) as opposed to the maximum they consider you creditworthy for, so that would imply they might be receptive to a request for an increase.

It might be the standard but certainly not strict initial limit. Mine was initially set at £5500.

To help answer the OP's question: I would wait at least 6 months before asking for a credit increase - most cards where I have requested a credit limit increase have had a restriction of only applying for an increase every 6 months.

Of the 2 cards I've tried recently, 1 rejected and said apply again in 6 months (I'm having to close the account as a result), the other said it was unable to increase the limit at that time but to call if I wanted to discuss things further. Phoned them, quick conversation with underwriter and 2mins later I had my credit increase

getmore4less

I would stick with purchase cards.

once one is getting full get another one, top up the first one after every min payment.

The problem with BT is the fees makes the interest you get from savings much lower and not worth it.

BT cards are ok if you are dealing with high cost debt but trying to make money is often just not worth it

mgarl10024

Hi,

Thanks for all the advice - much appreciated.

alexanderalexander wrote: »

PS is your current card M&S?

No. Capital One.

shiny76 wrote: »

most cards where I have requested a credit limit increase have had a restriction of only applying for an increase every 6 months.

Having looked at Capital One's FAQs since posting, I've found:

We review our customers' accounts regularly and will write to you to let you know if you're eligible for an increase to your limit. Please don't call our contact centre to ask for an increase, as our advisors aren't able to grant one and have no control over the timing and outcome of reviews.

Hm. I guess I'll see if they increase it on their own, otherwise I guess I'll have to look around when the time comes.

getmore4less wrote: »

BT cards are ok if you are dealing with high cost debt but trying to make money is often just not worth it

Feel free to poke at my maths here, as I am learning!
Just to use this card as an example, which may or may not be around when I need it:
Edit: can't post links. It's Barclay's Platinum Low BT fee Credit Card
16mths, 0%, effective 1.6% fee.
If I had the full £4000 on the card, the fee would be: £4000*0.016=£64.
16mths is 16/12 years = 1.333years.
My cash savings account = 2.8% before tax. Take off basic rate tax makes it 2.24%.
£4000*1.333years*0.0224interest = £119.46
So, switching cards leaves me £119.46 - £64 = £55.47 up.
Seems a good deal for a small amount of hassle? And you get 3mths of purchase spending too!

Thanks,

MG

YorkshireBoy

mgarl10024 wrote: »

Feel free to poke at my maths here, as I am learning!

16 x 2.25% minimum payments will erode the savings account balance and reduce the return somewhat. To see by how much plug your numbers into this calculator...

http://www.stoozing.com/calc.php

I make it a £37 profit, and that's without factoring in that you'll probably only get an effective 15 months. Is it worth it?

And you get 3mths of purchase spending too!

Never mix BTs with purchases on the same card, otherwise you'll be back in 4 months time asking "why have I been charged interest?".

And in general, if you're intent on slow-stoozing you'll maximise your profits by using a 12 month card for only 6 months and then opening another 0% on purchases card...especially in these times of low savings interest rates. However, it's an 'effort/benefit' trade off and you may feel the additional admin is not worth the additional return.

alexanderalexander

YorkshireBoy wrote: »

Never mix BTs with purchases on the same card, otherwise you'll be back in 4 months time asking "why have I been charged interest?".

Is this not (sometimes) okay? Your monthly minimum repayment (by law) has to go towards paying off the part of the balance which will attract interest earliest (which, in the case of a BT card, would be the purchase balance).

So, for example, I have a balance transfer card where my monthly minimum repayment is approximately 150 pounds. I do some spending on it, but always make sure that my monthly spending is well below 150 pounds. It seems to work fine.