Potentially great offer on my MBNA card, help me decide pls?

MrJester

Hi, so will try keep this brief and concise.

Debts:
Overdraft limit £1500
- Currently 0%, but as of Sep 2016 will be charged a fee for being in it
- I have £600 saved to put towards getting rid of this
Barclaycard £1600
- This too begins charging monthly interest as of Sep 2016
MBNA £2670
- Limit was recently upped to £5200 automatically
- No interest until June 2017 on current balance

So I received a letter from MBNA about deals on my account, checked my account online and here they are:
Balance Transfers
- 0% until June 2017, 3.5% fee, or
- 4.9% p.a. for the life of the balance, no fee
Money Transfers
- 0% until June 2017, 4% fee, or
- 4.9% for the life of the balance, no fee

It seems as though MBNA know exactly how much to seduce me with. With a total balance of £5200 I would effectively be able to BT the Barclaycard, and do a Money transfer to make up the rest (or most of it) of the overdraft.

Questions:
- Would you recommend taking a fee for 0% interest for a year, or a guaranteed yearly interest without the fee?
- Once I did a balance transfer with them, do you think the money transfer offer would also still be available?

I realise it totally depends on -when- I can pay it back. I've been in debt for a long while now passing the debt around and making progress, but it would mean one year to pay off over £5000 before any of the interest on the card began. Over £400 payback a month, which I cannot do.
Maybe because the the money transfer needed would be for a less amount that should be the 'til June 2017 deal, and the BT for a life balance.. Or maybe both should just be life balance, then I should only focus on the balance (2670 on mbna) that is due for June 2017. The other two balances will then have a life per annum interest, and will likely take longer to pay off so it might work out best?
If I end up being in a bad situation, and the full 25% interest kicks in a years time then I could be screwed by that.

What would you do? I think this is a great offer to pass up, I'd be able to consolidate all my balances into one - get rid of the overdraft, one of my credit cards, be able to switch banks for better deals/service...

Appreciate any advice from the great gods that is MSE users :beer:

bigadaj

Life of balance sounds the way to go, if you're not clearing within a year. In any case another 0% deal when the current one falls due will charge a similar amount and that charge would be upfront.

The prob,em might come in a year when the current mbna debt also comes off a 0% deal, as you have stated.

It could be that barclaycard could offer a good deal after transferring the debt away, and you would have a year before having to worry about it, when a new 0% card might be an option with a longer timespan, though no guarantees.

MrJester

bigadaj wrote: »

Life of balance sounds the way to go, if you're not clearing within a year. In any case another 0% deal when the current one falls due will charge a similar amount and that charge would be upfront.

The prob,em might come in a year when the current mbna debt also comes off a 0% deal, as you have stated.

It could be that barclaycard could offer a good deal after transferring the debt away, and you would have a year before having to worry about it, when a new 0% card might be an option with a longer timespan, though no guarantees.

Thanks yeah I think I'm going to just do a life of balance deal, whilst there'll be interest accruing each month its only about 0.40% for each balance. Being able to consolidate each debt is going to help a ton in knowing very clearly how much I'm paying to my debt each month because that will be the only one balance left to pay off.

Dobbibill

You don't say what your credit limit is with BC - are they offering you any better deals with a money transfer to clear the OD? Then use MBNA for the BT of the whole lot from BC.

Pay off as much as possible but then in a year or so see if BC have anymore offers for you and BT back what you haven't managed to pay off.

BC normally put any offers online too.

jamesd

The 0% deal looks like the cheaper one given how much money you have available. It's cheaper to start with and if there is a need for a later BT it'll be for much less money and the saving of the difference between 4.9% ongoing and 3.5% once until possible new BT will help.

Instead of the more costly MT you have time to use normal spending on a card to get out some cash, saving the normal spending money that you're putting on the card. To do this, BT to the Barclaycard more than you need to clear it then spend the in credit balance. If you can estimate the amount you can accumulate by doing spending on the card before September you could do a MT for just the difference between that and the remaining overdraft balance. But it's quite likely that after clearing the Barclaycard you'll get a better deal from them in the time remaining before September, so I'd wait, just putting the Barclaycard into credit by anticipated spending.

Barclaycard tend to do quite good existing customer deals, particularly compared to MBNA. Should be relatively easy to do a decent BT to Barclaycard from MBNA when that deal ends. It's also pretty likely that they will offer you a cheaper MT than the MBNA one if you've cleared your Barclaycard balance. You may not get this deal but Barclaycard recently offered me 0% interest on money transfers until 1 September 2017 with 2.9% fee. That's on the cheap side even for their existing customer offers. They are also one of the providers that tends to be more keen on increasing credit limits regularly and to quite high levels.

The BT and MT will be available for as long as specified in the deal. Probably says something like "for transfers done before 30 June" or maybe 31 July. It's likely that they will just offer yo a new deal when the current offer ends.

MrJester

Thanks for the thoughts all.

Jamesd tbh you've confused me a bit there. Barclaycard for me do not do very good deals, and I think its because I have been banking with them a long time and have been locked into an overdraft with them for years now so they have a good idea of my finances and thus don't often have much good to offer me. I checked the BT's on the Bcard currently available which are not great deals and even so I only have a £2000 limit.

MBNA on the other hand seem to want all my business, and I'm happy to do this on the life balance deals I think at the mo so I can get rid of this overdraft forever and be able to switch to a better bank, and then too see all my debt in one place and just throw money at it as much as possible.

bigadaj

Fair enough I agree with your logic.

The only point I'd make is don't get too focuses on having all your debt in one place, if you get a cheaper deal by having debt in two cards for example, whether that be a lower rate, longer 0% deal then go for that, loyalty isn't rewarded and your main concern should, always be minimising interest payments and fees, and maximising what you can pay back.

It sounds like you'll have to pay or transfer your current mbna deal in little over a years time so need to be aware of that.

bouncydog1

Just be aware that where you have a bt where interest is charged, any payments will go off that one first. That means that nothing will come off the 0% bt until you have paid off all of the one charging interest. So, if you can't pay it all off before the 0% ends you will need to wait until the 0% ends and interest is charged before you can effectively transfer the current 0% balance.