Mixing life-of-balance and 0% transfers on same card?

weebit

Hi everyone,

I have a barclaycard and transferred £800 to it at 6.9% for life-of-balance. I logged on just now to transfer more money to the same deal, but instead they're offering me 0% until November 2013.

Is it wise to transfer circa £600 to the card at 0% (from 34.0%) when there is already the LOB on it? What are the pit-falls i should look out for?

Thanks!

(FYI, these were both existing-customer deals)

chattychappy

Yep... go ahead. I've done this a few times on MBNA. It works well.

Normally with a 0% deal, you must pay some back each month which reduces it's value. If you have a LOB deal running on the same card, then all of your payments will will be applied to the LOB balance. This means you can enjoy 0% interest rate on the full balance for the full term (assuming you don't actually pay down the LOB balance during that time). Better value considering the fee you must pay. (Though of course you are now paying down the LOB balance faster.)

Only thing to watch is that you you must have the funds available to pay the 0% balance just AFTER it's gone to the standard rate (not BEFORE, as it will be applied to the LOB balance).

This is the only pitfall - you can't pay down the 0% balance in advance of expiry. You can, of course, build up a reserve ready and waiting in a savings/current account.

chattychappy

I'll add, that even if you don't have the funds to pay off the 0% balance when it expires, you are still better off doing it. It will simply mean that on expiry the 0% balance will go to standard rates - probably no worse than what you are paying now. If you can't transfer it elsewhere at least then all your further payments to this card will then pay down the standard rate balance with the LOB balance effectively "frozen" in the meantime.

The "positive payment hierarchy" works well in these situations.