Balance transfers and minimum payments? Advice needed.

Miguel1892

Hi folks,

I'm new to the forum so please forgive me if I jump right in with a stupid question, here goes...

I currently have a couple of dreadful, subprime credit cards on which I have run up balances that I am unable to pay off in full, so I have finally bitten the bullet and applied for a decent 0% balance transfer card with MBNA and been accepted.

My question is, if I transfer both balances onto the MBNA card prior to the dates the payments are due, will I still need to make a minimum payment to the old card providers to cover the interest that will have accrued on the balances since my last statement date, even though they are now gone from the card?

As you can tell I'm quite confused by this whole thing, so any advice would be gratefully received.

Thanks in advance,
Miguel.

[Deleted User]

You will need to check with the providers.

There are too many variables in terms of timings, statement dates, balance transferred, interest and so on, to give a clear answer.

foxy-stoat

Just make the balance transfers to both cards for the full balance less the next minmum payment and clear them both with the last payment.

Do cancel both cards once cleared or you will run up debts and be in twice as deep at some point.

Good lucks

redux

The transfer in is more than the minimum payment, so you shouldn't have to make another in the same period, but there will probably though not certainly be interest appearing on the next statement.

I would suggest make the minimum payment by the usual method, do the transfer to make the two payments together add up to either the last statement or current balance, and wait for the next statement.

The separate minimum payment protects you from missed payment sanctions if the balance transfer is delayed or fails.

Going to the current balance would stop any more interest from the day it arrives, but on the other hand some cards do seem to not have trailing interest if just the last statement balance comes in.

It may also depend on the card you're using for the transfers. If they allow only one payment to each card, and won't let you do another a few weeks later, go up to the current balance on the old. So this might be worth ringing up to ask.

Miguel1892

Thank you for your quick replies, I'll be sure to keep an eye on the online statements to see if there is any interest accruing after the BT is processed.

And foxy-stoat, wise words about cancelling the old cards. I've got the scissors at the ready. Can't wait to make those calls. I've paid quite enough interest to the likes of vanquis and aqua! Although, in defence of such providers, they did help me to build my credit back up from zero to the point where I am now able to successfully apply for mainstream credit with decent offers and limits. But I'll say it again, I won't miss the disgusting interest rates they charge.

redux

I would consider keeping one, to use for current spending, and always pay in full from now on.

A couple of the Aqua cards have no loading for foreign currency transactions, so that might potentially be useful. If you don't have one of those it might even be worth asking to change. Aqua Rewards also has 0.5% cashback, ok not much but it still adds up slowly.

The thing about the new card with the balance transfers is that if you have current spending on there as well, this will incur interest at the current rate, so it might be as well for this spending to be either zero or only pretty modest, say £20 or £30 a month, and that's why it may be worth keeping one of the old cards (unless you're getting another new one).

Miguel1892

Redux,

The plan is to 'mentally' cut up the MBNA card and just focus on reducing the balance as quickly as possible. Once the balance transfers are complete it will have a balance of around £6,000 but with a bit of luck and no small amount of willpower I should be able to get rid of that within 10 months.

My salary is currently quite good but I had used the old credit cards to absorb a lot of the costs of relocating for my current job. Fast forward one year and I'm only just getting round to sorting out my finances.

I would dearly love to apply for a decent all round card too, maybe something with a 0% spending rate for the next couple of years. I see that Virgin are offering a card which I am pre approved for that meets those criteria, although I am loathed to ding my only recently revived credit rating by taking on two new cards in the same month, plus I would then need to look at closing both of my old cards, which would significantly reduce the average length of my banking relationships and make me appear less stable. Decisions decisions...

Oh and finally, I wonder if I would trust myself with an increased amount of available credit. The two old cards had a combined limit of £7050 and the MBNA one already sits at £6500. Is adding more available credit a good idea? In the long term, probably, but in the short term I think I might be better advised to do as you say and keep one of the old cards for emergencies etc, rather than ratcheting up the credit line.