Trying to reduce debt

Kbubbles

Hi all,

I'm looking for some help I currently owe £2900 on a credit card charging me 39.9%apr I have been approved for a second card (both cards will be cut up they are not for spending on) the limit is £900 but the APR is 29.71 (the lowest I have been offered) I can afford to pay 175 (25 more than my current minimum) is it worth me paying the 3% fee to move 900 of the balance from the higher apr card to the new one?

I intend to pay the minimum on the new card and put as much credit a month as I can onto the old one but not sure if the fee actually makes me worse off?

RavingMad

Short answer is yes. The fee of 3% would cost you £27 to do the balance transfer but the difference of 10% apr means approx £90 less in interest payments in the 1st year

Have you worked out the min payment on the new card? Is it the same % as the old card? Some cards want 1%, some want more

Alternatively, have you looked at a loan?

grumbler

Balance Transfer Calc

Anthorn

If you move £900 from the existing card to the new card you are not reducing your debt, you are just moving it from one place to another. Personally, I would do it differently: I would keep the balance on the existing card and pay what I can afford to reduce the balance while keeping the new card as a safety net.

You will most likely find that the reducing interest on the reducing balance will be equivalent (or greater) to the saving in moving £900 to the new card.

I would highly advise not maxing the limit and paying more than the minimum payment: You could find that the balance is actually increased as a result of making only the minimum payment due to interest added sending you over-limit.

cjd1991

Anthorn wrote: »

If you move £900 from the existing card to the new card you are not reducing your debt, you are just moving it from one place to another. Personally, I would do it differently: I would keep the balance on the existing card and pay what I can afford to reduce the balance while keeping the new card as a safety net.

You will most likely find that the reducing interest on the reducing balance will be equivalent (or greater) to the saving in moving £900 to the new card.

I would highly advise not maxing the limit and paying more than the minimum payment: You could find that the balance is actually increased as a result of making only the minimum payment due to interest added sending you over-limit.

Yes, it's always good to have a safety net, especially in today's day and age. Great advice.