Is this good, MBNA?

Jo4

I got a phone call yesterday from MBNA saying I could transfer a balance for 6 months at a rate for 1.9%. They said there would be a transfer fee of 2%. Therefore if I transferred a balnce of £1100, this is the amount they used as an example, I would pay £22 transfer fee and £1.77 a month in interest and at the end of the 6 months they said I would have paid £10.62 in interest and £22 in transfer fees, total of £32.62! The male advisor said I had to take the deal out there and then. Then after almost 19 minutes on the phone he said he was going to phone me back. He also said he thought the transfer fee was expensive but that was the best he could do!

Is this good or not?

fatboyonadiet

It's OK, depends on what you want to do with really. Not brilliant though considering it's only for 6 months, makes the 2% fee hit a bit harder.

Reaper

Very roughly and using dodgy maths that is equivilent to an annual rate of 6%, taking into account the costs and length of time. So it's ok, but nothing special. No use for stoozing as you won't find a savings account paying more than that in net interest.

On the other hand if you have debt on a storecard charging you 30% APR which you could transfer then snap it up!

Rafter

I bow to your dodgy maths Reaper! My less dodgy maths worked it out at 6.06% APR so as you say - not a stoozing option but OK if you have balances elsewhere and can't get a 0% deal from somewhere else.

R.

fatboyonadiet

Good job I didn't post my calculations, I figured that you could make a small profit by stoozing it!

Rafter

Because I'm in a calculating type mood today I've been trying to come up with a 'to stooze or not to stooze' reckoner for this and similar deals.

If I assume the following:

1) It is not worth stoozing unless you are going to make £25 in six months (because of the credit search, hastle setting up etc) - I accept this may be lower for some hardcore money savers but it is only 1.4% on the stoozed money.

2) You are able to stooze £3500 (which is the minimum limit on a platinum card I believe)

3) You find a card like MBNA with a £5 minimum repayment.

4) You can earn 5% after tax on a savings account or cash ISA or in an offset mortgage.

Then.......

a) It is not worth stoozing any 6 month deal with a fee unless you can BT enough to exceed the BT fee cap. So in the MBNA example if the 2% fee is capped at £50 you would need to BT at least £3,500 to make the stooze worthwhile.

b) It is not worth stoozing any deal where the BT interest rate is more than 2.9% (without BT Fee) since you won't make £25 profit in 6 months.

c) A uncapped BT fee of 2% on a six month offer is the equivalent of 4% APR and is not worth stoozing unless you get at least a seven month BT deal.

d) Any deal with a BT fee and interest on the transferred balance is unlikely to be worth stoozing unless interest rates on savings rise by at least 2%

d) If you are not stoozing but transfering a higher interest debt from elsewhere then go for it, although you may be able to save even more by going for a 0% deal somewhere else.

R.