To balance transfer or not?

Mimi_Arc_en_ciel

Hi,

Just want to pick your brains about something.

My CC 0% ends on Dec 2015. It’s less than £2k. I have the money (in a TSB Current account earning 5% AER interest) to pay this off but I’m wondering whether to balance transfer it and keep adding to the money in the savings account for a bit longer?

On one hand I think it would be better to clear the debt, but I’m not sure whether this is the “best” thing to do (does that make sense?)

If I pay the debt off now then my TSB account will sit less than £500 so the interest would naturally drop. If I BT the card to another 0% deal I could keep the money in the TSB account (I have 2) so could run 1 bank up to £2k and then drip the money into the other TSB account and earn interest in there also?
So – the question I have is What would you do?

(I don’t have any other debt, no mortgage – Not sure if this is relevant)


Thanks!

YorkshireBoy

While ever there are no fee/low fee BT deals around I'd keep the debt running and make a little savings interest...especially if I could make 5% AER.

Mimi_Arc_en_ciel

Hmm - Also:

The fee to transfer to another card (used Halifax 0% for 36 months as a comparison) is 2.45% so to transfer the balance it would cost me £46

trying to work out the interest over 36 months on 5% AER with TSB but my head hurts so will look later and see if its worth it lol

SeduLOUs

To look at it without doing any maths, if the balance transfer fee is less as a percentage than the annual interest rate you will get in interest (after tax), then you will 'profit' as long as the BT period is 12 months or longer (the longer it is the more you can earn).

I'm taking advantage of a few 0% purchase deals at the moment and keeping the cards close to the limit, making minimum payments and keeping the cash ready to pay them off in an interest bearing account. I'll consider balance transferring it all at the end of the 0% period depending on what's available at the time.

Voyager2002

Mimi_Arc_en_ciel wrote: »

Hmm - Also:

The fee to transfer to another card (used Halifax 0% for 36 months as a comparison) is 2.45% so to transfer the balance it would cost me £46

trying to work out the interest over 36 months on 5% AER with TSB but my head hurts so will look later and see if its worth it lol

Assuming that your second TSB account is empty (they only pay interest on up to 2,000 pounds): if you do a BT so that you have an extra 2,000 to put in it then after a year that will have earned you 100 pounds before tax. That would more than cover the 45 pound balance transfer fee.

Mimi_Arc_en_ciel

At the moment they both have around £1300 in them.

One is soley for CC
The other has money for "yearly" bills (Car tax etc)

However once I reach the £2k limit there's always the chance to move to a Nationwide Flexdirect (5%AER for 12 months >£2500) or Club Lloyds (4%AER £4k+)

At least that's what I was thinking of doing I'm still relatively new on this so still figuring things out lol

The "yearly" bill TSB Account will not reach £2k on those bills alone with me removing funds to pay for things (car tax, house ins etc when they are due)