Doing a balance transfer over 10 months

jibbyboo

Hi all,

To build up my credit rating, I have had a capital one card (£1.2k limit) and use it for daily spending instead of my debit card, repaying in full every month.

I've just bought a house, and therefore have quite a few bits and pieces to get (white goods etc).

I've got a much bigger limit on my post office (£3.2k) credit card, and they are doing 0% on balance transfers until April, 2.98% of total amount as handling fee and minimum repayments of £5 p/month. e.g. the current capital one balance is £800, so that would be a total fee of £23.84 to transfer to post office

So what I'm thinking is make big purchases on my capital one, transfer the balance to post office, and then pay even amounts over 10 months rather than digging into my savings in a big bulk withdrawal.

My credit rating isn't the best, but it's reasonable (although I think being a homeowner now will help), so I'm not sure if there's a card with a better deal if this seems like a good idea?

I don't trust my own maths and logic skills, so thought I'd refer to the experts here

Thanks chaps!

JakeGreen

The main calculation is this:

What interest rate are your savings earning you?

What is the percentage fee to make the balance transfer?

I'd say 3% is a standard balance transfer fee, so unless your savings are earning more than 3% you'd be better off paying for the items from your savings, unless the 0% BT is for longer than 12 months then you can do a bit of stoozing to make up the difference.

jibbyboo

My ISA is 2.5% and percentage fee is 2.98%.

Hmm, I suppose paying off incrementally just seems less scary than digging into my savings.

JakeGreen

jibbyboo wrote: »

My ISA is 2.5% and percentage fee is 2.98%.

Hmm, I suppose paying off incrementally just seems less scary than digging into my savings.

You'd be slightly better off using your savings and then paying your excess money each month back into the ISA.

However as the numbers are pretty similar do whatever you feel most comfortable with.

jibbyboo

Was thinking I'd get a longer-span for 0% interest on balance transfer cards and got rejected for RBS . Concerned about applying for any others now as may damage credit rating further.