B/Card BT to Cap One... Worth it??

Dunree

Hi guys,

I've been offered a BT by Cap One at a 3% transfer fee and 0% for six months (39.4% after 6 months).

I'm currently paying 21.9% to B/Card and owe zero on the Cap One card.

I also pay £500 p/m towards the B/card.

I'm aiming to be debt free in the next few months, and so far, it's looking good

If I can do this within the six months, does this sound a good deal??

Dunree

InsideInsurance

Very roughly speaking, as long as itll take you more than 2 months to pay off the b/card then you'd be better off transferring the balance as your currently paying around 1.6% interest per month -v- 3% on the whole balance if you were to transfer it

JimmyTheWig

Depends on how quickly you are going to pay this debt off. Because the 3% fee is on the total current balance.

If you're paying £500 and are talking about a 6 month timescale to clear the debt then lets say you owe £2833. Staying on the Barclaycard will cost £167 in interest, which is 5.9% of your current balance. It would be cheaper, in this case, to pay the one off 3% fee and pay no interest. You'd save £82.

But you then talk about being debt-free in the next few months.
So maybe you owe £1000. This would cost you £25 in interest to keep it on Barclaycard, which is £5 less than the 3% transfer fee.

Basically, if you can repay the debt in three months or less then stay with Barclaycard.
If it's going to take more than this then do the transfer, unless it will take significantly longer than 6 months in which case you don't want to be stuck on the 39.4% for too long.

Dunree

JimmyTheWig wrote: »

Depends on how quickly you are going to pay this debt off. Because the 3% fee is on the total current balance.

If you're paying £500 and are talking about a 6 month timescale to clear the debt then lets say you owe £2833. Staying on the Barclaycard will cost £167 in interest, which is 5.9% of your current balance. It would be cheaper, in this case, to pay the one off 3% fee and pay no interest. You'd save £82.

But you then talk about being debt-free in the next few months.
So maybe you owe £1000. This would cost you £25 in interest to keep it on Barclaycard, which is £5 less than the 3% transfer fee.

Basically, if you can repay the debt in three months or less then stay with Barclaycard.
If it's going to take more than this then do the transfer, unless it will take significantly longer than 6 months in which case you don't want to be stuck on the 39.4% for too long.

Hi Jimmy,

Thanks for taking the trouble to respond

The balance owed on the B/Card is exactly £3500.

I'm also waiting for an MBNA PPI cheque coming which I'll throw at it arrives

So basically, if I do the BT, it will be cheaper?

Regards,

Dunree

JimmyTheWig

Dunree wrote: »

The balance owed on the B/Card is exactly £3500.

I'm also waiting for an MBNA PPI cheque coming which I'll throw at it arrives

So basically, if I do the BT, it will be cheaper?

How much is the PPI cheque? (Don't need an exact figure.) When do you expect it to come through?

Dunree

JimmyTheWig wrote: »

How much is the PPI cheque? (Don't need an exact figure.) When do you expect it to come through?

Hi Jimmy,

The cheque will be for £2400ish. I'll probably use half for that and half for my JLPC

JimmyTheWig

Have no idea what JLPC is, but can't imagine it is important for this question.
When do you expect the cheque?

Dunree

JimmyTheWig wrote: »

Have no idea what JLPC is, but can't imagine it is important for this question.
When do you expect the cheque?

Hi Jimmy,

JLPC is the John Lewis card, and cheque has just arrived

Dunree

JimmyTheWig

You never told us you had another card as well!!
I wondered if JLP was John Lewis, but couldn't work out why or what the C was!

Anyway, I'll ignore this bit for now. I'll assume that the £1200 from the cheque will pay it off and that either this is the highest interest rate or you have particular personal reasons to pay this off first.

I would do something like this...
1. Balance Transfer £1500 to Capital One from Barclaycard.
2. Bank the cheque.
3. When it clears, pay the £1200 off the Barclaycard.
4. Pay the minimum repayment on the Capital One card.
5. Pay the rest of your £500 (e.g. if minimum on Capital One is £50, pay £450) a month on the Barclaycard.
6. This should clear the Barclaycard in two months. You will get residiual interest on the next statement. Pay that then it should be clear.
7. Once the Barclaycard is clear, use all the £500 a month to attack the Capital One card. (* see next post)

Total cost:
3% of £1500 transfer = £45
Interest on £800 paid off in two months = approx £22.
Total = approx £67.

JimmyTheWig

(* from step 7 above)

Some people may prefer at this point to carry on with the minimum repayments on the Capital One card and pay the rest of the £500 a month into a high interest, instant access savings account. Then, before the 0% period runs out, use the money is savings to pay off the card.
This won't cost you any more, as the card will be at 0% interest, but will earn you some money (£7.50, maybe?) on the savings.
Depends if you see it worth setting up a savings account for. Might be a good thing, however, as you could then continue to put money into this account for future spending.

Dunree

Apologies Jimmy, the John Lewis card has a 2% bt from Cap one on it, £1800ish transferred from Cap One to JL, balance of £3400 at the moment.

Cheque now in bank, but it won't clear till next week, which is also payday

It's a bt from B/card to Cap One I'm looking at. They have offered 0% for six months and a 3% fee. It's quite ironic as I've been asking them for a card with a lower interest rate, but they kept saying no.

As I say, I'm currently paying off £500 p/m towards each of them at the moment. And with this cheque, should be debt free come January.

Thank you very much for taking the time to give such a detailed response, I very much appreciate it

Dunree