Should I take the 0.0% Balance Transfer deal?

badhoon

Hi, This is my first post and i was looking for advice from anyone on my current situation.

I have 3 credit cards.
I'm trying to get myself back in the black and i am religiously not using or putting any more debt on them.

Barclaycard with £4405 on it
Natwest Mastercard with £3834 on it
and a Virgin Money Card with £6500 on it.

Interest wise:
Natwest is costing between £50 and £60 a month.
Barclaycard is costing between £90 and £100 a month.
Virgin is costing between £95 and £105 a month.

In my opinion Barclaycard's interest is killing me and i need to get the total down so its manageable. (£50 a month is manageable for me.)

Now Virgin are offering me free balance transfers until next March.
"0.0% until 23 February 2013 on all Balance Transfers completed before 31 March 2012
A transfer handling fee will apply of 2.98% of the transaction (minimum of £3.00)"

I'm currently paying a minimum payment on my Natwest card which is approx £90 a month. I am also paying £195 off my Barclaycard every month by DD and between £200 and £250 a month on my Virgin card depending what i can afford.

Basically the question is shall i continue doing what i'm doing and pay them all off as i am, (I'm looking to increase the natwest payment once i've finished paying a loan off in 2 months) or do i try and reduce the interest on my Barclaycard by transferring some onto the Virgin card, i only have a few days to do this??

Sorry its long winded but i needed to share the information. The answer maybe obvious but i get easily blinded by 0% interest transfers, hence why I'm in this mess.

One final question, how come my interest has increased on all my cards this month form what it was last month, even though I've paid more off and have less on my card this month ???

Tixy

What are the APRs on each card - that is the easiest way to compare them.

If you think bcard is costing the most why are you making overpayments to the virgin card? you really need to pay anything extra above the minimums to the card with the highest APR.

I'd find out the APRs and put the information into the snowball calculator along with how much you can afford a month.

Then do the same assuming you've done the transfer and entering the 0% rate and the rate it then reverts to (remember to add on the balance transfer fee to the balance on the new debt on virgin).

That will show you if its worthwhile and how much you will save.

I'd imagine it it worth doing and that you will save quite a bit, but without knowing the APRs and how much you can afford to pay in total a month its difficult to calculate how much.

http://www.whatsthecost.com/snowball.aspx

thenudeone

Unless your interest rates are unusually low it will almost certainly be better to transfer balances from the highest of the other two cards onto the Virgin card, to within 95 of the credit limit.

Once that's done, you should then pay any spare cash onto whichever of the three cards has the highest APRs, and pay just the minimum on the other two cards. (Any payments on to the Virgin card will always go to paying off the highest APR. leaving the 0% balance untouched). Don't pay more to Virgin than the balance at the higher APR (£6500 at the moment).

jamesperrett

badhoon wrote: »

One final question, how come my interest has increased on all my cards this month form what it was last month, even though I've paid more off and have less on my card this month ???

How many days between statements? Interest is usually calculated daily with statements being sent around the same date each month. Since February is much shorter than the months next to it, the statement covering the end of February will show less interest.

To answer the other parts of the question we need to know the interest rates involved.

James.

badhoon

HI, Sorry for not getting back sooner, I really apreciate your answers and would appreciate one more.

My interest rates are as follows:

Barclaycard
Interest Rates
Annual Purchase Rate 29.90%
Cash Interest Rate 29.90%
On my last statement it said:
Interest On Your Standard Balance
INTEREST 2.207%


Natwest Mastercard

If i remember rightly, my Natwest has an interest of 18.9 or 19%


Virgin

Rate Type
1.4566% Balance Transfers
2.0751% Cash
1.2916% Card Purchases
1.5976% Money Transfers/Cheques

Dont forget, to make a balance transfer i will be charged 3%.

I'm considering it although i always thought it to be better just to pay everything off? My card limit is £8500, im currently on £6450??

Kind Regards

Tixy

Whether its worth doing a transfer and how much the saving could be will how much you can afford in total a month towards your debts.

It will also depend on what your virgin balance is made up of - is it all purchases or do you have cash advances or balance transfers on there?

Running your figures through the snowball - If you can afford £535 a month (and assuming virgin is all purchases) then if you stick as you are but pay off your debts in the most cost effective manor - i.e. all the extra to the most expensive card then it would take you 36 months to pay off the debts and cost you £4515 in interest.

If you do the balance transfer from barclaycard to virgin then you'd be able to transfer £1625 to the 0% deal.

Running that through the snowball - then assuming you pay £535 a month it would take 35 months to repay the debt and cost you £3538 in interest plus £49 in charges - total £3587. So you would be better off.

If you can afford only £500 a month then with your current debts it would take 40months and cost £5069. Doing the transfer would mean it takes 38months and costs £3973+£49.

If you could afford £600 a month then with current debts it would take 31months and cost you £3760, in you do the transfer it would take 30months and cost £2984+£50.

Obviously these are based on certain assumptions, and assume that you pay off the same amount each month and don't spend any more on any of the cards. To get a more accurate result I would look out all your figures and do your own snowball calculations.

Whether you decide to transfer or not - I would certainly suggest that in future you make all overpayments above the minimum to the barclaycard balance not virgin - otherwise you will pay more interest than any of the examples above.

badhoon

Thanks Tixy - You're a legend and that snowball calculator is really useful.

I've just spoken to Virgin and if i was to transfer £1500 from Barclaycard to Virgin, my minimum payment on virgin would be around £180-£190 a month, but this would obv reduce my barclaycard to just under £3K (£2905).

How could i work out what my new interest would be on my barclaycard now?

Also, Currently I'm paying over £200 a month on my virgin anyway!!

Worth remembering that the 0.0% balance transfer would only count for the £1500 i transfer.

Individually, on my virgin and the different rates I have £67 to pay at 20% (which would come off with the next payment)

Then £6027 at 18.9 % and then finally I have £500 would be paid off at 16.6%.

I think it must be worth doing? Or have i missed something?

badhoon

To add to above, the sensible thing would be to pay off barclaycard (if i did do the transfer), then Virgin and then natwest?