help with maths balance transfer

tom_c_2

hi.

I have got an offer of 0 percent balance transfer (5 percent fee) for a year from mbna
I currently have 800 on it at 34 percent and 4500 limit.
I have 6000 on barclays 23 percent apr) (6500 limit)
so thinking I should transfer but dont want to be worse off in a year plus 5 percent fee is quite alot i think? if i cant pay it all off.

should i take the offer? whats a sensible amount to transfer?
any advice welcome
cheers

Tixy

Depends on how much you can afford to put towards your debts each month (assuming these 2 are your only debts).

Rafter

Tom,

As you correctly point out, the main thing is not being stuck with a large balance at 34% APR in 12 months and have nowhere to transfer it too.

Main question to ask yourself is whether you can be strict and pay down your debt in the next 12 months.

On the face of it doing a balance transfer is a no brainer at 5%.

Say you transferred £3000 the fee would be £150 but you would be paying £690 interest to Barclays over the same period.

Your strategy is then to try and get the debts paid off in the right order.

Overpay £800 on your MBNA card as soon as you can to get rid of the 34% APR debt (they must pay that off first before your new 0% balance). Make minimum payments on Barclays while you do this.

Then switch over so you overpay as much as possible on the Barclays card and pay just the minimum on MBNA.

Make a note in your diary or phone calendar when the 0% comes to an end and look around for a new transfer deal (if you need it by then).

Make sure you have a direct debit in place to pay the minimum balance otherwise you might find in the small print that MBNA can remove the 0% deal and start charging you 34% again.

Good luck

R.