what to choose??? low interest for the life of a balance or 0% interest fixed period

Luisa42

Have a balance of £2144.16 to repay at the moment on a Santander card but 0% interest is coming to and end this month.


Currently I'm not in top financial shape (following financial abuse and a nasty divorce), managing by but unsure I can pay as much as I would like to clear outstanding balance.


I can't apply for credit cards as I'm rebuilding my score t the moment. However, I have two options available from current providers


1) MBNA 0% till 16/01/17 (3.5% fee)
2) MBNA 4.9% life of balance (0% fee)
3) VIRGIN 0% TILL 31/08/17 (3.5% fee)

Is there anybody there that can help me choosing between option 2 or 3 please ??? What would be cheaper?


I dont think I would be in a position to repay full balance from now till 08/17 (£123/month approx.)


Also my virgin card has an outstanding balance of £205.34 which I assume I would have to repay before transferring a balance. Not sure about this thought, can someone confirm?


Thanks very much for your help

sourcrates

Hi,


So, to clarify, how many current card providers do you have, and what are the balances on each ?


As you mention three current providers, but only list two debts ?

Sanctioned_Parts_List

For that size of debt, the difference is roughly £10.

If you choose Virgin Money then you pay £75 flat. Most CCs follow the principle that your interest bearing debt is paid down first, followed by your promotional rate debt. At £123/month, your interest-bearing debt would be gone after 2 months. 17/08/2017 is roughly 20 months; over 20 months you'd pay 19 payments of £123 and 1 of £87 and be debt free. (Perhaps the last month or two would be interest-bearing but hardly worth switching by then). Total amount paid £2,424

If you switch to MBNA life of balance (assuming you also move the Virgin Money balance over to it, which I would), the maths is harder - took a couple of minutes in LibreOffice, but in essence you'd pay 19 repayments of £123, one of £101, total amount payable £2438, and about £90 in interest. In round numbers.

So I guess it's whichever is easier for you.

EDIT:: if you have other balances to move, then the results will be different.

Luisa42

Thanks for that !
I guess you have calculated the interests over the same period of time for both virgin and MBNA offers.
What happens then if I dont repay at the total in that period. How does the interest get charged then ?


If I don't manage to repay fully in the 0% interest period, is it better to still choose this option or the 4.9% instead ?
I understand its a matter of preference
Just trying to make most financially efficient position that wont suffocate me in the short term.
Thanks !!

Sanctioned_Parts_List

No, it just worked out that way. I assumed £123/month was what you could afford to pay and calculated forward from there.

If what you can actually afford to pay is only £50/month or £100/month, then the calculation will change, and you'll need your crystal ball handy to determine your position in 08/2017. If you'll have repaired your credit sufficiently to get further 0% offers, then the solution is clear. If not, less so. I'll check back in in about 8 hours or so - bed time for me (11pm here).

What would happen if you went over the period is that Virgin would charge at the full rate (17.9% still?), while the MBNA rate wouldn't change.

getmore4less

Use one of the snowball calculators. Putting in what you can afford.