Advice on balance transfer

tppp

OK, new to posting to the forum but long time reader after a bit of advice as I try to get myself out of a self made hole. I originally balance transferred my first card balance to a second card, but instead of cancelling the first one and paying off the second at 0% I was stupid and got myself in a mess.

The situation as it was a few weeks ago was two credit cards...

card 1: £2,720 balance, 24.4% APR
card 2: £3,295 balance, 16.4% APR

I was chipping away at those balances, but really slowly. Then I found out about the MBNA rate for life card. I had hoped to put both balances onto one of those but my existing card 2 is underwritten by MBNA so I couldn't, which puts me here currently:

card 1: £0,000 balance, 24.4% APR
card 2: £3,295 balance, 16.4% APR
card 3: £2,720 balance, 5.9% APR

I'd planned to cancel card 1 and be in a much better situation, happy days. But 16.4% APR is still pretty high on card 2 and slows me down paying it off.

Card 1 has now offered me 6 month 0% APR on balance transfer up to £2,900 (then it goes back up to 24.4%).

I'm thinking it might be sensible to transfer as much as I can from card 3 to card 2, so my situation would be this...

card 1: £2,900 balance, 0% APR for 6 mnths then 24.4%
card 2: £0,395 balance, 16.4% APR
card 3: £2,720 balance, 5.9% APR

In my head that means I can pay off the 16.4% APR balance on card 2 after two months, then spend 4 months and as much as I can afford on card 1. Then when the 0% rate finishes after 6 months move it back to card 3 (which offers 0% balance transfer rate that'd take me through to this time next year).

Reading the credit card shuffle that seems the smart thing to do. But does it make sense and sound feasible or am I about to make another stupid mistake? Using the 6 months 0% APR then shifting money back to card 2 for 6 months more 0% APR looks like the smart plan on paper, but it feels complicated and I'm scared I'll mess it up and am thinking it might be worth just clearing and cancelling card 1 and living with 16.4% APR on card 2's balance.

In 12 months I'll be in a different financial situation and I plan to move balances to (I hope) cards with better rates than 16.4% APR, but I've got this wrong before and want to get advice first.

Any thoughts massively appreciated.

sfax

How much are the credit limits on each card and what is the handling fee for balance transfers? I'm not sure 0% for 6 months is a particularly good idea if you'll pay 2 x 3% in fees over a 6 month period

blitzboy

tppp wrote: »

I'm thinking it might be sensible to transfer as much as I can from card 3 to card 2, so my situation would be this...

card 1: £2,900 balance, 0% APR for 6 mnths then 24.4%
card 2: £0,395 balance, 16.4% APR
card 3: £2,720 balance, 5.9% APR

In my head that means I can pay off the 16.4% APR balance on card 2 after two months, then spend 4 months and as much as I can afford on card 1. Then when the 0% rate finishes after 6 months move it back to card 3 (which offers 0% balance transfer rate that'd take me through to this time next year).

Reading the credit card shuffle that seems the smart thing to do. But does it make sense and sound feasible or am I about to make another stupid mistake? Using the 6 months 0% APR then shifting money back to card 2 for 6 months more 0% APR looks like the smart plan on paper, but it feels complicated and I'm scared I'll mess it up and am thinking it might be worth just clearing and cancelling card 1 and living with 16.4% APR on card 2's balance.

In 12 months I'll be in a different financial situation and I plan to move balances to (I hope) cards with better rates than 16.4% APR, but I've got this wrong before and want to get advice first.

Any thoughts massively appreciated.

The best option would be to get another 0% card to transfer card 2 to.

But if this isnt possible then I would definitely do what you have said. Once the 6 months is up you could either transfer back to the original card on a new 0% deal OR subject to your credit limit being high enough you would now be able to transfer the remaining balance to the MBNA card, as before.:)

tppp

Thanks both,

SFAX, looks like it'd cost me £80 to move it this time for the 6 months interest free, so I'll be saving myself about £120 in interest for that time period. Seems to make sense.

tppp

Right, I've done it.

card 1: £3,200 balance, 0% APR for 6 mnths then 24.4%
card 2: Cleared
card 3: £2,720 balance, 5.9% APR

Since the 0% only last 6 months I'm going to focus my payments on that initially to bring down the larger debt, then pay around £80 to move it back to card 2 for a further 6 months 0% (assuming that offer's still in place - I'll review that in May).

Thank you both for your insight, here's hoping I can smart this time around!