Balance transfer- Can someone point out the flaws in this idea?

Rabacus

Hi all,

This is my first post and I will keep it short and sweet!

I'm planning to transfer a £1000 balance from a Debenhams Santander Card to my new Natwest Platinum Card (0% bt for 20mnths, 0%purchases 6mths)

My girlfriend and I planned to buy a holiday using my new card giving us 6 months to pay it off interest free.

What if I bought the holiday using the Debenhams Card, then immediately transferred the whole balance of say £1700 to the new card, would the holiday effectively be interest free for 20 months on the new card? Or am I just being daft... Would i incur lots of interest? is it just simpler and cheaper to buy it with the new card?

Any advice appreciated! Thanks!

sentinel7

Presumably there is a fee for transferring the balance?

mynameistallulah

The flaw in your idea is buying a holiday on credit. Going on holiday when you cannot afford it is crazy.

jimjames

mynameistallulah wrote: »

The flaw in your idea is buying a holiday on credit. Going on holiday when you cannot afford it is crazy.

You are assuming they can't afford it. Well over 18 months ago I paid for flights to New Zealand on a new credit card that cost over £5000. This balance was transferred to another Santander card in October. By the time the balance is paid off it will have been nearly 2 years interest free. We have the money in savings to pay it but there seems no point if we can use interest free deals. The transfer was also 0% fee otherwise I would have paid off at that point.

So OP, yes you can do it and it does work but make sure that the card doesn't charge for balance transfers and also don't buy other goods with the card or you will have to pay interest on those purchases.

Rabacus

I understand this mynameistallulah and thanks for your concern in my experience most people buy a holiday on credit and pay it up to their travel agent. I also didn't say I couldn't afford I go on holiday. But thanks for the reply nonetheless

I'm just trying to ascertain which option is cheaper in the long run. There is a balance transfer charge of 2.9%. Is it just a case of doing the math? Would I incur extra interest on the old card even if I immediately transfer the balance to the new card?

Rabacus

jimjames wrote: »

So OP, yes you can do it and it does work but make sure that the card doesn't charge for balance transfers and also don't buy other goods with the card or you will have to pay interest on those purchases.

The new card is 0% 20mnths on bal transfers with a fee of 2.9% and 0% on purchases for six months. So I can work out what it will cost if I use the new card. But what I'm really not clear on is if I use my old card to purchase it, and then transfer the balance... Is that effectively giving me 20months interest free on the holiday? I have every intention of cutting up my card and closing my Debenhams account once the balance has been transferred.

I'm going to be transferring the current balance from the old card to the new in any case.

Thanks for your input it'such appreciated

scott_lithgows

Or you could get a Tesco or m&s card and get 15 months 0% on spending (no BT fee),and get a few pounds of vouchers to refill your fridge when you get back.
Also m&s do a good deal on Trav cheques.

chris-j

If you transfer £1000 it sill cost you £29. If you put £700 holiday on card at 6 months interest free and clear this within 6 months this will cost nothing (although might end up with small amount of interest in month 7 depending on how they allocate payments).
If you put holiday on debenhams card then transfer you will have transfer fee of £49.30.

fozmcfc

As you already know, what you want to do will mean paying 2.9% for the balance transfer.

Natwest charge interest on the 2.9% fee (something which catches people out), so make sure you make a first payment covering the fee + interest.

The Debenhams card will have some trailing interest on the £1000/£1700 as interest is charged daily.

For instance say your statement is issued on the 1st and you put the purchase on the 10th and you finally transfer the balance on the 19th. The £1000 balance will be attracting interest from the 1st till the 10th and the £1700 balance from the 10th until the 19th.

So you should expect interest on the Debenhams card on the next statement to account for the 19 days or so of the previous month where interest is charge.

Obviously the interest won't be huge, but say again your statement is issued on the 1st and you pay this amount in full on the 10th, you will still get some small interest on the amount between the 1st and 10th on the following statement.

After that the Debenhams card should be at zero balance

Rabacus

Thanks very much for clarifying, that's Exactly what I was trying to establish. Thanks everyone for their advice