Natwest 6.9% vs Virgin 0% with fee

beaumont32

Wondered if someone could help?

I currently have £9000 on a Natwest Credit Card at 6.9% variable and paying it off with a fixed monthly sum of £250. I've just received an offer from an existing Virgin card of 0% for 18 months with a transfer fee of 5%.

Would I best to move the balance to the Virgin card for the 18 months with the transfer fee, and continue to pay the same £250 a month or just stick with the Natwest deal?

Thanks in advance

bjm2601

Assuming that you would keep both cards and neither carry an annual fee (although I think the NW does unless its older). Then you should save about £300 by taking out the Virgin deal over an 18 month period. Additionally your outstanding balance would be lower. You may want to wait for someone to verify my calculations before proceeding though..

msallen

You should move just the amount that you can pay off within the 18 months (about half?) and leave the rest on the NatWest card, then revert to just making minimum payments (or some would recommend minimum plus one pound) to NatWest.

To squeeze a few extra quid out of the deal, you could also just make minimum payments (or min + 1) to Virgin too, putting the rest of the spare monthly cash into savings generating some interest, and then use those savings to pay off the Virgin card 17 months from now.

YorkshireBoy

I'd be inclined to stay with NatWest. The BT fee would add £450 to your balance, so straight away you'd owe £9,450.

Whilst the interest rate on NatWest is higher, it's charged on an ever decreasing balance.

So you may be a year or so before you see any 'improvement', leaving only 6 months or so to 'benefit'.

But the biggest danger is that NatWest slash your limit as soon as they receive payment from Virgin, which cuts your options for transferring the £4,950 on at the end of the 18 months.

Then again, if you stay with them, NatWest may vary their variable rate...?

Foxy-Stoat_3

Get a Barclay card and transfer the balance on their 2.99% for 34 months for the win !

£270ish a month and your debt free in 34 months.

love2save2012

In 18 months NatWest will be charging you £48 in annual fees (£24 each year!) and ~£750 in interest vs a one-off 5% balance transfer fee of £450 with Virgin. In 17 months time you can just switch to a 0% fee Balance Transfer card like Halifax, Tesco or Santander. You should not be paying an annual fee on a credit card!!

Also try and pay more than £250 whenever you can, you can always make more than 1 payment a month to a credit card if you have managed to save a bit more in a month.

grumbler

5% fee is about (1+5%)^(12/18)-1=3.3% in APR terms (a little more taking the minimum payments into account that gradually decrease the balance).

So, it's definitely worth transferring the amount that you can repay when 18 months expire.