Calculations help

gollum007

OK, so I'm not sure on this, can someone check my figures please?

I've got a balance of £500 (Approx) on a card which I took out for new spending last year.

This £500 is sitting in my ISA, earning 3% tax free. The interest free period ends in January.
My other card (Barclaycard) keeps offering to me an 18-months 0% deal, which will charge 3.9% BT fee.

The stoozing calculator gives me a return of £22.67 over the 18-monhts period.
A simple 3.9% of £500 is £19.50, giving me a few quid further in profit.

Do these sums make sense? I want to make sure I haven't overlooked anything stupidly obvious:)

mjm3346

If they charge interest on the BT fee that could reduce the margin further.

If you always max your ISA allowance then the tax free advantage on the £500 will be lost forever as you can only put it back into an ISA by using part of the current years allowance.

zerog

I don't think this is worth bothering over for £2 profit, potentially less if you aren't careful. Just.. don't have a coffee one morning or something.

If you got a 24 months 0% deal with a 1% min payment and 1.5% fee, then that might be worthwhile.

gollum007

Cheers, it wasn't so much the rate or the exact figures, but rather the nagging feeling I'd missed something (3.9% is more than 3%.....)

I'm not moving it at present and haven't researched deals, but I've never really tried a stooze

MisterMotivated

Don't forget that you'll need to repay part of the balance each month. While the repayment money might not come directly from the £500 in your ISA, it's less new money you'll have spare to add to the ISA.

I've been drafting a stoozing calculator of my own, and it has come up with the following figures, assuming a repayment of 1%/min £5 or £25, as many cards are...

It might still need a little tweaking, but based on a reducing balance, it gives a total interest earned of £13.29 with £25pcm payments, or £21.05 based on £5pcm payment (I was going to post the figures but the table keeps messing up ).

MisterMotivated

gollum007 wrote: »

Cheers, it wasn't so much the rate or the exact figures, but rather the nagging feeling I'd missed something (3.9% is more than 3%.....)

Yes, it can seem a bit weird due to the different timeframes, ie 3% is per year. If you split the percentages by month, 3.9% over 18 months is 0.216667% per month, while 3% over 12 months is slightly higher 0.25% per month.

However, as my example above, the actual calculations aren't as simple as that, as you're paying the BT fee up front whilst the ISA interest is on a theoretically reducing balance.