Constantly transfering balances

digging

Hi I'm new to posting but have been a 'lurker' for some time now. I have a few credit cards which I always make sure are on 0%. When the rate ends I transfer to another card at 0%. I never used to keep a check on this but now I keep a little 'debt book' with rates and info etc so I'm organised with it. However over the last year I feel that all these balance transfers aren't helping as much as I first realised... in that I pay a transfer fee (I know this is how they make money - I understand this bit). For example if I transfer £2000 at 3% I pay £60 transfer fee. So my debt has become £2060. If it was for 6 months then really it was like being charged £10 a month so not intirely as 'free' as I thought. If I move all of my credit card debt (over £9000) at some point over the year I'm paying at least £270 in fees. I am aiming to clear these cards in 4years but the fees are adding on over £1000.

Does anyone else feel like they are not getting anywhere with balance transfers? Or am I just being too hard on myself?

opinions4u

The best way to reduce the balance transfer fee cost is to reduce the debt faster. Pay more.

A 3% BT fee for 6 months is like a 6% APR. Still cheaper than doing nothing.

cwal

Hi Digging,

I have to say I found out the same thing about myself recently. One of my cards sent me through an annual statement showing what I'd transfered and what the fees were - I was pretty horrified when it totaled £700!!

I think 0% balance transfers are useful but as you can see from my signature finding out how much i spent on them has really spurred me in to action to try and clear the debt. Can you not look out for the longest 0% possible and then really look at ways to clear the debt? I've been selling stuff on ebay, zapper, car boots etc.:)

digging

Yeah true...it's still cheaper than doing nothing. I pay extra off every week.

I usually have 2/3 offers through the post on the credit cards I already have so rather than applying for new ones all the time, I pick the longest and transfer the most I can.I've done a car boot and put that money straight towards a card. I do have stuff i want to sell on ebay...but time gets away and before I now it, it's been sat in my 'ebay' box for months. I suppose there's no time like the present. I'm going to sort the box tonight.

jellie

Have you considered looking for a balance transfer where the interest rate is set for the life of the balance? The interest rate would be much lower than normal rates and you could continue to make overpayments.

Not sure if this would be the cheapest option for you, but might be worth a look.

digging

Thanks yeah I'll look into that. It may work out cheaper depending on the life % offer. I've had them for around 6/7% in the past which would be better than 5% transfer fee for 6months. I'll do some sums (which is all I seem to do nowadays!) and ask my current credit card companies who are offering 0% what the life% offer would be. Thanks jellie

digging

well I've just transfered a bunch of money around different cards and paid a total of £133.14 balance transfer fees:eek: I know it is cheaper than leaving it at full interest rates...I just don't like my debt figure going up again after working hard to reduce it. At least I have until march before I have to transfer around again. I'm going to try to pay the £133.14 extra off aswell as my normal payments over the next 6 months. I'm going to do this by selling on eB*y and make £22.19 (and hopefully more) each month. It just gets me down :mad:

chattychappy

Well... yes. It really would be best if balance transfer fees were shown in the APR calculation. Eg 0% BT rate for 6 months plus 3% fee, is probably more than 6% APR equivalent, depending on timing of repayments.

Always worth comparing 0% type deals with any life of balance deals you are offered. LoB deals also have more security - you don't have to worry about the deal running out and having to find somewhere to transfer it to.

digging wrote: »

It just gets me down :mad:

It will get them down, when you don't need to take up offers anymore!! So good luck!

sfax

If you're paying off £9,000 over 4 years (assuming equal payments of about £210/month) you'll pay about £1,200 in fees in total (equiv 6% APR) if you can only get 6 months interest free each time. If you can get hold of one of the 23 month 0% cards instead (and then a second 23 month deal when the first one ends) you'd only pay about £410 in fees (about 2.2% APR).

digging

Thanks what a difference! I did try to work it out and compare LOB rates with longer 0% rates but ended up with a sheet of paper full of numbers and a headache.:eek:


My credit score is fine so a long 0% offer should go through ok but now that I've done my transfers should I wait til march when it runs out? As I've technically 'paid' for 6 months 0%?

sfax

digging wrote: »

Thanks what a difference! I did try to work it out and compare LOB rates with longer 0% rates but ended up with a sheet of paper full of numbers and a headache.:eek:

I put together a spreadsheet a while ago to weigh up the best balance transfer strategies. I use them quite a lot as they are much cheaper than short term loans if managed properly. I get stung sometimes when I assume I'll get another credit card and they decline or they give me one with a lower credit limit. The problem is that you have to have more credit card accounts open when you are switching which can be frowned upon by the lender

digging wrote: »

My credit score is fine so a long 0% offer should go through ok but now that I've done my transfers should I wait til march when it runs out? As I've technically 'paid' for 6 months 0%?

Yes, definitely wait. That fee has already been paid so too late and you'll also pay off 6x£200 in the interim so your next fee will be £36 less than it would if you transferred today