Barclaycard, transfer a balance to it or not??

Jo4

If you had a balance of almost £1,600 on Barclaycards 0% for lob but you had to put £1 on it every month, charging 1.667%, and they offered you 1.9% pa interest until July 2008 with no handling fee, would you think this was a good deal or would you look for a different card to do a balance transfer to?

Any advice as I need an urgent answer, preferably within an hour??

Bokkens

if you compare it to other LOB cards that are slightly higher rate say 4%,5% 6% then you have a good deal as you are already making a saving.
Effectively 12mths at 1.9% is the good bit,spending only £1 a month on the card is the hard bit as most people will haphazardly spend £5,£20,and before you know it your spending wildly on it and each spend logs up the interest.
This deal was quite common 4 years ago and the consensous then was to set up a direct debit from your bank account for exactly £1 and thereby only incuring the lowest amount of interest.
I would BT several amounts upto your limit as there is no BT fee.
keep an eye on it and always pay more than the minimum payment each month and you should be able to use this offer to your advantage.
Good luck.

Milarky

It depends on several things:

1) Do you intend to borrow more overall or the same amount as now?

2) Can you arrange to clear the existing balance before applying for the new offer ?

3) how much 'standard' balance have you built up already?

As you've had the card as long as I have the 'standard' balance will be at least £77 generating interest of not less than £1.28 per month. It could a somewhat higher balance and charge of course and will rise about 2p per month. So you will pay an average of not less than £1.40 per month over the next year.

Your maximum 0% balance will be about £1500 today with payments of about £380 over 12 months - giving an average 0% outstanding balance of about £1320

12 x £1.40 / £1320 = 1.27% (compare to '1.9%' on offer)

So it will be that much cheaper to remain with you current deal.

However the new offer must allow you to borrow extra (as you will have been paying down the original amount borrowed for four years) I'd estimate your original credit limit would allow you to get up to £4K at 1.9% and Barclaycard may now allow you to increase that limit today and borrow up to perhaps £5000 at this rate

With 5K borrowed (and an average balance of £4500) you could stooze at 5% net as a basic rate taxpayer. The relative pictures might then be:

1) [5%-1.27%] x £1320 = £49 approx profit*

2) [5%-1.95%] x £4500 = £137 approx profit

As you see, it very much depends on being able to borrow a larger sum now and having no problem repaying it 12 months from now

*although this profit would continue into the following year, it is becoming less and less, and at some point you will have to pay off the remaining balance before all the 0% is repaid

Jo4

There is almost £1,600 on the card with £1 a month having to be charged to the card to keep the 0% lob but they have now offered a bt on approximately £2,800 at 1.9% with no transfer fee until July 2008.

The additional £2,800 would be to clear debt of an exisitng card. I hope this gives yous a clearer picture because although it seems a good deal I don't think it is worth touching because the person to whom it is for is unsure whether they would have it paid back by July 2008 or not.

Am I right that is is not worth touching unless they could repay it by July 2008?

Bokkens

Jo4 wrote: »

Am I right that is is not worth touching unless they could repay it by July 2008?

As highlighted above you can make money on this if the funds are placed in say a high interest account or an ISA for the year.
Your point above is not really a financial one more a personal issue with repaying the loaned amount if you think you are unable to do this or have difficulty with the movement of the funds back and forth then DON'T DO IT.