How balance transfers work?

JustAnotherSaver

I'm just wanting to make sure i get the jist of these before i use one.

Now i know "they transfer the balance"...

Let's take £3000 as an example.

Let's say i have a card with Santander & they give me a £3,000 limit which i max out.

I got a letter from Nationwide offering me...

* 0% on balance transfers for 15 months with a fee of 0.55% & 0% on purchases for 15 months.
or
* 0% on balance transfers for 26 months with a fee of 2.4% & 0% on purchases for 15 months.

Now is the fee a 1 off fee or a monthly fee?

If one off, then the first option would be a fee of £16.50

The second a fee of £72.

Or is that £16.50/£72 per month?

So i would then need to keep that £3,000 in a savings account over the duration & have it earn more than £16.50/£72 for it to be worthwhile (assuming 1 off payment)?

Have i understood this correct?

Sharon87

It's a 1 off fee. You can only usually transfer up to 90 or 95% of your credit limit (including the fee).

Also a balance transfer is to another credit card. if you want to put it in a savings account you need a MONEY transfer. MBNA and Virgin and a few other providers do money transfers, not all cards give it as an option.

Hope this helps

CLAPTON

JustAnotherSaver wrote: »

I'm just wanting to make sure i get the jist of these before i use one.

Now i know "they transfer the balance"...

Let's take £3000 as an example.

Let's say i have a card with Santander & they give me a £3,000 limit which i max out.

I got a letter from Nationwide offering me...

* 0% on balance transfers for 15 months with a fee of 0.55% & 0% on purchases for 15 months.
or
* 0% on balance transfers for 26 months with a fee of 2.4% & 0% on purchases for 15 months.

Now is the fee a 1 off fee or a monthly fee?

If one off, then the first option would be a fee of £16.50

The second a fee of £72.

Or is that £16.50/£72 per month?

So i would then need to keep that £3,000 in a savings account over the duration & have it earn more than £16.50/£72 for it to be worthwhile (assuming 1 off payment)?

Have i understood this correct?

this doesn't make sense
a balance transfer refers to transferring a blance : a purchase refers to making a purchase

what does the product actually say

Candyapple

Sharon87 wrote: »

It's a 1 off fee. You can only usually transfer up to 90 or 95% of your credit limit (including the fee).

Also a balance transfer is to another credit card. if you want to put it in a savings account you need a MONEY transfer. MBNA and Virgin and a few other providers do money transfers, not all cards give it as an option.

Hope this helps

↑↑ is spot on.

Just to add, most people use balance transfers to clear their debts with other credit cards which have a high APR / paying interest on.

In your example, with Santander you are allowed to transfer 95% of your balance (£2,850).

If you went with the 15 months at 0.55% fee offer it would cost you £15.68 (one-off). If you were to clear your balance in this period you should ideally be paying £190 per month.

If you went with the 26 months at 2.4% fee offer it would cost you £68.40 (one-off). If you were to clear your balance in this period you should ideally be paying £109 per month.

So in the scenarios above, you would need to decide whether the extra £52.72 in fees is worth the additional 11 months interest free.

JustAnotherSaver

The product says exactly what i said it did in the example i gave.


And sorry if i've explained it a little back to front (& thanks for the info on 95%)...

Basically i have a 0% on purchases credit card. I can't remember the limit but let's say it's £3,000. I ended up maxing it.

I spent the money on the credit card instead of my debit card. The money is sitting in a savings account (ok not earning what it was 5-10 years ago, but still).
At the end of the 0% period i always paid off the credit card - i just took the money out of my savings account. Job done.

But i'd always ignored balance transfers. This time i wanted to know more about them.

So the idea was to instead of pay it off as normal, LEAVE the money in my savings account & balance transfer.

So i would pay off 5% it seems & 95% would go to a new card .... costing £15.68 you say.

So on that 15 month example, basically the £2,850 i would then have in my savings account would need to earn more than £15.68 (plus minimum monthly repayments) for it to be worthwhile..??

Have i got the idea now? And does that make more sense than it did before?

Sharon87

Yeah, that's called stoozing, and for you I reckon it'd be best to go one with a smaller fee, even if the length is less.

Remember with balance transfers you can't transfer balances from same institutions - so MBNA and Fluid you can't transfer between for example or Halifax/Lloyds or Natwest/RBS. Just something to bear in mind when looking at cards. It's not always obvious if the credit card is linked to certain banks so you have to do your research.

Dobbibill

Lloyds/Halifax do allow you to BT cross brand

redpete

You also need to make the minimum monthly payment each month against the new card's balance.

Cycrow

Dobbibill wrote: »

Lloyds/Halifax do allow you to BT cross brand

I dont know if its changed recently

but originally you could only transfer one way, cant remember which way it was however.

ie, you could transfer a balance from Lloyds to Halifax, but not Halifax to Lloyds.
or, Transfer from Halifax to Lloyds, but not Lloyds to Halifax

This may have changed however