Transfer to pay balance

Paul_VW

just logged into my Virgin credit card account, and I noticted I can transfer up to £4000 into my current account at 0% for 1 year (4% fee)

now my balance is approx £1500 can I transfer £1500 to my current account then pay my balance with it? (so its interest free?)

is this wise? seems to easy!

Gromitt

I think you'd need to check what they would pay off first. Drawing the £1500 would give you a balance of £3000, and then you pay off £1500, giving you back the balance of £1500. Whether you'd effectively pay off the higher interest or the interest free portion I'm not certain. Typically I'd expect the higher interest part first.

bengalknights

You would pay off the oldest balance first so yes the balance should be cleared

thenudeone

bengalknights wrote: »

You would pay off the oldest balance first so yes the balance should be cleared

It's just a co-incidence that it will do so in this case.

MBNA, like all card issuers, will apply any payments to the balance with the highest current interest rate first. In this case, the existing balance which is being charged interest (or would be, if it wasn't paid off in full each month).

Only if there are two or more balances at different rates under different offers will the age of the balance or offer start date matter.

I presume the card isn't being cleared in full each month? If so, the best thing to do once the money is the bank account is to pay £1500 of it straight back to MBNA to clear that part of balance which is presumably being charged interest?

And if you can't afford to pay off the spending in full each month you should also be very wary of increasing your debt even further. It will all have to be paid back and with interest as well after 12 months. £4000 in the bank sounds great but you only have to look at the forums here to understand the sort of problems it can cause when people borrow money they don't really need and more than they can afford to repay.

Paul_VW

Correct, I am not paying the balance off in full. I dont even own the card any more, cut it up a year ago. So the whole balance is on a standard rate.

I am not planning on increasing my debt, just reducing the interest rate, and this seems an easy way.