Which Is Cheaper??

OMAR

I have just received some cheques from Barclaycard offering one of the following......from my Gold Visa.

1. A cheque at 0% until July 2005 at 2% handling fee
2. A cheque at 5.9% for life at also 2% handling fee

I just cant work out what the best deal is if I use a cheque to pay my loan off for £2000.00, I would be paying back £500.00 per month. So the balance would be gone by August 2005. Which deal do I go for to pay less interest??

Any website calculators that could help??

Milarky

It depends on how long you want to take to repay the loan - but almost certainly the 5.9 rate will be cheaper over any timescale which involves realistic repayements

Over 2 years for instance it would cost £94.38 per month -including the 2% fee - to repay the loan - assuming that the the 'go to' rate after 4 months was 15.9% - and you didn't move it for a lower rate in the meantime.

But at 5.9 APR throughout the two years the same repayments drop to by £4.15 [to £90.23] - saving you about £99.

For comparison, the 5.9 with fee over 24 months equates to an APR of just over 8%! So although cheaper it ain't exactly a bargain [because of the impact of the fee]

[By taking longer to repay at 5.9% you spread the cost of the fee out over time and the APR falls a bit of course]

Galstonian

Beware of repaying loans early, sometimes you get charged interest anyway, always ask for a settlement figure in advance.

Milarky

Galstonian wrote:

Beware of repaying loans early, sometimes you get charged interest anyway, always ask for a settlement figure in advance.

Except this would be a credit card cheque/balance transfer. I have yet to come across any 'early repayment' conditions where these are concerned. Barclaycard are happy from you to repay it the next day as they'll have their 2% [£40] 'handling' fees.

You must therefore be thinking of fixed interest personal loans, I assume.

Reaper

It is to pay off a loan according to the original post

if I use a cheque to pay my loan off

Chadsman

OMAR wrote:

So the balance would be gone by August 2005.
Any website calculators that could help??

Omar also says that the debt would be gone by August 2005 (five months time) so a 0% deal for 6 months would be cheaper.

deemy2004

OMAR wrote:

I have just received some cheques from Barclaycard offering one of the following......from my Gold Visa.

1. A cheque at 0% until July 2005 at 2% handling fee
2. A cheque at 5.9% for life at also 2% handling fee

I just cant work out what the best deal is if I use a cheque to pay my loan off for £2000.00, I would be paying back £500.00 per month. So the balance would be gone by August 2005. Which deal do I go for to pay less interest??

Any website calculators that could help??

Pay a cheque into your current account for the maximum limit at 0% till July 05
Pay off your £2k loan
Put the rest into a high interest savings account
Add £500 per month to the savings account
In July 05 pay back the 0% debt (if you can't shift it elsewhere).