0% balance transfer manuver

Epoulson

Hi,
I have a question about the priority of a 0% balance transfer deal over debt that is incurring interest when paying a card off.

I have a maxed out cc that I'm paying 0% on (card A) and a cc that i have lets say £300 that is incurring interest and has a limit of £700 (card . Both these cards i am being offered a 0% bt. If I bt from card B to card A to max out card B (£400) and then transfer the £400 back to card A to once again max it out, is the remaining £300 on Card B now 0%? obviously taking the 3% transfer fee into account.

Hope this makes sense and thanks for any clarification on this matter.

grumbler

Epoulson wrote: »

I have a maxed out cc that I'm paying 0% on (card A) and a cc that i have lets say £300 that is incurring interest and has a limit of £700 (card . Both these cards i am being offered a 0% bt. If I bt from card B to card A

If card A is maxed out, you can't transfer a balance to it.

to max out card B (£400)

Then it's a BT from A to B.

and then transfer the £400 back to card A to once again max it out, is the remaining £300 on Card B now 0%?

Yes, as the second transfer from B to A (payment from A to will clear the interest-bearing balance in the first place. See the B's Summary Box and the T&C for 'allocation of payments'.

However, for this you need to transfer only £300 balance from A to B and then back.

? obviously taking the 3% transfer fee into account.

Double fee.

David301

manoeuvre*

chattychappy

This kind of thing can work out well. But bear in mind:

1) When you have a maxed out card, it is VERY easy to miscalculate and go over the limit. Allow for BT fees, interest, forgotten CPAs etc. If you incur an overlimit fee, this can destroy any saving you were hoping to make on interest. In the case of a 0% card, you will probably lose the deal for such a misdemeanor.

2) Check the standard interest rate on the balance you are carrying. If, say, your standard rate is 2%/month (APR 26%) and you are paying a 3% BT fee twice (=6%), then clearly it's not worthing doing if either your BT deal expires within 3 months OR you think you can pay the amount off within 3 months.

3) Some people are "pyschological" about these things. If clearing all the balance to 0% and not seeing an interest charge each month encourages you to borrow more or repay less, then don't do it.

4) Don't forget other options - eg applying for a new BT card to avoid the double charge. Or a 0% purchase card and putting all your spend there (no fee for this kind of 0% credit) so you can push as much cashflow onto your interest bearing card.