What does balance transfer involve?

Sunblind_Duck

My bank, Lloyds, has written to me asking me to transfer my Capital One balance (£2,800) with a 12 months interest free offer and a charge of transfer charge of 3 per cent. I currently pay an average of £120 pm off the card. Roughly what sort of difference would this make to my repayments?
I owe £2,900 on my Lloyds card.
At the moment, although the two amounts are virtually the same, I am being charged about £30 pm more by Capital One.
Any advice appreciated.
SD

YorkshireBoy

A quick check of their online summary boxes shows the minimum payment calculation to be the same, ie 1% plus interest.

The reason your Capital One minimum payment is £30 larger (for a similar balance) is due to it having a higher APR.

So to answer your question, the contractual minimum payment (once the whole balance is with Lloyds, and ignoring the 3% fee addition) will fall substantially...by the amount you're currently paying in interest each month to Capital One.

However, if you only pay this new minimum payment, instead of paying what you paid before, you're not going to clear the balance any quicker.

So, is your objective to:

1. Lower the monthly payment, or
2. Clear the debt quicker

Sunblind_Duck

Thanks YB. First, an apology. I had a rush of manure to the brain. My Lloyds balance is, in fact, just under £2000, so that explains the difference in repayments.
The idea, is to pay off my debts as soon as possible, and if I can achieve this by transferring the Capital One balance, all the better.
I assume that the whole lot is lumped together on my Lloyds card?
Your advice has been very helpful.
Thanks once again.
SD

YorkshireBoy

Sunblind_Duck wrote: »

I assume that the whole lot is lumped together on my Lloyds card?

Can't answer that, as I've never paid interest on my credit cards and so have never had a split balance like you'll have when you transfer.

However, I'd imagine they'd show two balances...one interest bearing (the existing Lloyds debt), and the other interest free.

To me it's an absolute no brainer to shift the debt ASAP. The fee involved likely equates to just over a month's interest on Capital One, giving you 11 months of 'benefit'.

Sunblind_Duck

YorkshireBoy wrote: »

To me it's an absolute no brainer to shift the debt ASAP. The fee involved likely equates to just over a month's interest on Capital One, giving you 11 months of 'benefit'.

Quite right. Should have done it ages ago.
I've just had a look, and it seems like a straight-forward procedure.
SD

Sunblind_Duck

Well, I did it, and can't believe how straight-forward it was. Thank you very much for all the advice.
Much appreciated.
S.D.