Quick and maybe dumb question, re balance transfers

rob.b.666

Hi all.

Both of my crdit card companies have recently offered me balance transfers, so I'm thinking of swapping a chunk of the balances between them.

Is this okay, or will the first get wise to the fact that I've just moved an external balance in, then moved an internal balance out again ?

I've noted that the card companies concentrate on paying off the high interest amounts first so assume if I moved £3k from say Mastercard to Visa, then moved £3k from Visa to Mastercard it wouldn't negate the 0% offer ?

I know there's transfer fees to consider, but this equates to just over a months interest, so will still save several months worth, so should be worthwhile.

Any advice appreciated.:)

Rob

[Deleted User]

Yes, you can do as you propose, due to the current payment hierarchy.

sfax

Yes, I do this a lot but I would wait until you have statement showing a zero balance before transferring the second amount. This might be overkill but I always do

rob.b.666

sfax wrote: »

Yes, I do this a lot but I would wait until you have statement showing a zero balance before transferring the second amount. This might be overkill but I always do

Assume a check via on-line banking would suffice ?

sfax

It may suffice but where you have interest already accrued and yet to be paid, you may get these interest amounts charged that then sit there accruing more interest because your monthly payments are paying off the balance transfer first and the interest charge next. Depends on the bank. I wait for the statement because it's cleaner and it contains details of any interest due

rob.b.666

sfax wrote: »

It may suffice but where you have interest already accrued and yet to be paid, you may get these interest amounts charged that then sit there accruing more interest because your monthly payments are paying off the balance transfer first and the interest charge next. Depends on the bank. I wait for the statement because it's cleaner and it contains details of any interest due

Thought the payments paid off higher interest balances first ? That's what my Visa terms say.

JimmyTheWig

rob.b.666 wrote: »

Thought the payments paid off higher interest balances first ? That's what my Visa terms say.

They do, these days.
What sfax is describing is how the system used to work, not that long ago.

thenudeone

sfax wrote: »

where you have interest already accrued and yet to be paid, you may get these interest amounts charged that then sit there accruing more interest because your monthly payments are paying off the balance transfer first

It shouldn't.

Payments should be applied to whichever balance has the highest rate.

Some card issuers apply payments to statemented balances first, before new transactions, even if the newer transactions are at a lower rate (very naughty IMO) but even in this case, by the time you make the payment after the first statement after the transfer (keep with it), Both the new transfer and the interest on the old transfer will be statemented transactions, so your payment will clear the interest first.

There might be one month where you get charged interest on the interest but even if your balance is £5k, a months' interest on a month's interest @ 2% per month (26.8% APR) is only £2, so hardly the end of the world. It's much cheaper than leaving the full balance on another interest-charging card for up to a month, when you could have transferred it to a 0% card earlier.

sfax

thenudeone wrote: »

It shouldn't.

Payments should be applied to whichever balance has the highest rate.

Some card issuers apply payments to statemented balances first, before new transactions, even if the newer transactions are at a lower rate (very naughty IMO) but even in this case, by the time you make the payment after the first statement after the transfer (keep with it), Both the new transfer and the interest on the old transfer will be statemented transactions, so your payment will clear the interest first.

There might be one month where you get charged interest on the interest but even if your balance is £5k, a months' interest on a month's interest @ 2% per month (26.8% APR) is only £2, so hardly the end of the world. It's much cheaper than leaving the full balance on another interest-charging card for up to a month, when you could have transferred it to a 0% card earlier.

Fair point. I'm overly cautious because of the days when some companies used to charge interest on the balance transfer fee and pay the fee off last. It's also to get a clearer picture of how much you can transfer and stay within the 95% limit etc but you can approximate the interest owed and factor this in