Transferring a balance onto a 0% credit card

wondermouse

After much discussion and deliberation my s/o and I have decided that our 30 year old bathroom is totally minging, and we need to replace it.

We have worked out that, using a 0% credit card deal, we would be able to pay it off over the course of 12 months, so the latest Barclaycard deal would be ideal.

However, our problem is this. Neither our chosen contractor, nor the equipment supplier accepts credit cards. Both are highly reputable, and well known and respected, so no problems there.

My question is how can we pay the supplier and the contractor, and transfer the balance to a credit card? I assume making a cash balance transfer to our bank account is not an option? (that would seem too easy and I suspect we'd be hit by large charges?)

Any helpful advice greatfully received.

JimmyTheWig

There are cards that allow you to do this, but I don't believe that Barclaycard are on of them. Martin calls it a Super Balance Transfer and the details are in this article: http://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs.
So you could do it with the Virgin card in the article for a 4% fee. That's 4% of the whole balance. If you are paying this off over a year that's like 8% APR.


Alternatively...
How much are you going to spend on the bathroom?
How much do you currently spend each week that could be spent on credit card (e.g. supermarket shopping, petrol, meals out)?
When do you need the money for the bathroom?
Have you got access to savings in the short term or any other borrowing (e.g. overdraft)?

I'm thinking you could get the Barclaycard deal for purchases and use it whenever you spend money. Put the cash that you would have spent to one side and then use that to pay for the bathroom. The practicalities of this will depend on how quickly you would be able to do this. If you have access to other money then you could use this to pay for the bathroom and then pay it back using my plan.


Or, alternatively you can normally get 0% overdrafts by switching current account providers. Though it doesn't appear anyone's offerring anything more than a £250 limit for this right now.

wondermouse

That's certainly one idea. Not sure how a one-off 4% becomes 8% APR, how does that work? (which is why I use these forums I suppose!)

What I'd really like to do is use one of those discounted balance transfer rates.

The problem we face is that we'll need to pay a substantial chunk up front, so we can't use purchases to cover that money. Another option is a bank loan, but again these are not cheap.

blitzboy

I paid for windows recently by applying for the m&s 15 months 0% purchase card and purchasing m&s sterling travellers cheques with it as they treat them as a purchase whereas they are usually treated as cash.

I then paid the travellers cheques into my bank account and paid for the windows by cheque.

There is a 1% fee for the travellers cheques but for the convenience of 15 months without interest £10 for every thousand spent was more than worth it.

wondermouse

blitzboy wrote: »

I paid for windows recently by applying for the m&s 15 months 0% purchase card

How much did you borrow?

YorkshireBoy

wondermouse wrote: »

Not sure how a one-off 4% becomes 8% APR, how does that work?

It doesn't!

The Virgin card's 4% SBT fee for 20 months 0% works out at around (4 / 20 x 12 2.4% APR.

If you're considering the M&S 1% Sterling TC method, then do some research first and check your bank(s) will accept them as not all do!

Whichever way you decide to go you need to factor in what you're going to do when the 0% rate ends and you haven't cleared the balance, because if you can't get BT card your borrowings could cost you circa 17% APR.

JimmyTheWig

wondermouse wrote: »

Not sure how a one-off 4% becomes 8% APR, how does that work?

YorkshireBoy wrote: »

It doesn't!

Oh yes it does. Approximately, at least.

Lets say you're borrowing £1000 and you will pay off in equal amounts over a year.
A one-off 4% fee _on the whole balance_ will cost £40.
From http://www.moneysavingexpert.com/loans/cheap-personal-loans#calc, borrowing £1000 for 12 months at 7.5% APR will cost you £40.
So the one-off fee of 4% is equivalent, in your situation, to an APR of 7.5%

Why the big difference? Why is YorkshireBoy (unusually for him) wrong?
Because if you were looking at a loan, the amount you owe would reduce through the year. The average balance would be about £500. To make the interest on that the same as the fee on the initial amount, the interest rate has to be roughly double the fee rate.


[Feel free to stop reading now.
But a Stoozer will tell you that if you got the Virgin deal then you shouldn't be paying it off in equal amounts over 12 months. What a Stoozer would do is pay off the minimum payment each month and put the difference into savings. You could do this with a regular saver earning up to 8% (gross) interest. Then just before the 20 months are up pay off the full balance with what you have in the savings account.
Any interest you make from doing this is yours to keep!
If, in your mind, you offset this interest earned against the fee that you had to pay you will end up with an APR of much less than 7.5%. You should be able to break even, or maybe be up on the whole deal.]

blitzboy

wondermouse wrote: »

How much did you borrow?

That's not really relevant to you as it will depend on your credit limit but I borrowed £3600. so my fees were just £26 and i have 15 months without interest to pay for them.

You can purchase right up to your credit limit (allowing room for fees)