The One Account?

bunking_off

gawdblesshim wrote: »

Would that work? Im really just opening my mouth and letting my belly rumble here.

Oh, yes, as James says. It's criminal to have a CAM/offset account and not do such stoozing. The One Account makes it simple because it has an associated Visa card that you can transfer balances directly onto (and NB they encourage you to do it!). This is why many of us with One Account's are pretty unconcerned about the interest rate...currently less than 10% of my mortgage debt is actually in the One Account, most of it is stoozed onto 0%/life of balance cards.

Just remember;

a) to be very careful about paying the credit card off before the standard rate kicks in plus never miss a payment, and
b) to look carefully at the T&Cs. Since you need to make the minimum payment every month, the level of that can make a big difference to the gains you make. My MBNA card only wants £25 minimum per month, whereas my M&S card wants over £100 on a similar debt (bad example as it's a LoB, but it illustrates the difference). Obviously for the latter, the amount you pay back becomes material because you're only saving interest on the full balance transfer for the first month, after that it's a steadily diminishing figure.

Richardn

Hi,

I have a One Account at present and I am doing a slow stooze on a halifax 0% credit card and have presently got £5,000 sitting in the account.

I have thought about fast stoozing but was always put off by the balance transfer fee.

At present I have just over £25,000 outstanding on the One Account with an interest rate of 6.3%.

Does it therefore make sense to stooze onto a 0% credit card with a 3% fee over 12 months????? How much am I likely to save if I stoozed £10,000????

Cheers

bunking_off

In broad terms, between £200 and £300 depending on how much you need to pay back each month.

E.g. if the minimum payment is 3%, initially you'd be saving interest on £10k in your OA, but by the end of the 12 months it'd be saving interest on c£7800. Overall you'd save just over £500 in interest payments, from which you'd need to knock off the £300 BT fee, making just over £200 up on the deal.

E.g. if the minimum payment is the greater of any BT fees/interest and £25 (MBNA style), then at the end of the year you'd still have £9775 on the card so your interest savings would be nearer the £570 mark...knock off £300 gives you £270 saved.

Obviously stoozes on 6 months are much more difficult to cost in. Take a look at life of balance transfers as well...some have no BT fee and so long as the OA interest rate remains in excess of them, you're making savings, albeit smaller ones that prevail for a longer time, e.g. Citibank's BT-free card is 5.8% I believe, which only saves you 0.5% so £50 a year on £10k, but it's a "set it up on a direct debit and forget" that will yield savings until such a time you pay it off. (I was luckier, have an M&S card at 3.9%...)

gawdblesshim

wymondham wrote: »

In a nut shell, the account would suit someone who had as much as possible left over at the end of each month - this would in effect be the mortgage payment, so whatever you did'nt spend would go towards this - sometimes it could be £300, but sometimes if your wage allowed it, it could be say .. £1200 etc and this is where the large drops in outstanding mortgage come from. The great thing is that is has not 'gone' as such and is still available to you to draw out if you need it, but this should be discouraged unless really necessary (it's not for plasma TV's as I often see as an example!!)

In all my calculations/spreadhseets etc I remove any mortgage payment as this is considered to be the part that normally says 'left over', or 'spare cash' etc !!

It takes some getting used to and getting the way it works clear in your head - if you have any questions just ask and we'll all do our best!

Remember the golden rule : It's not what you earn that matters, it's what you spend!!

ps: my salary is nowhere near £30,000 .... i wish!

Im trying to figure out if this is a good thing for me. I'm a little unclear about what folk mean by 'spare cash' or 'money left over at the end of the month' I earn a decent wage, and along with my fiance it probably comes to about 47000 combined BUT we are always skint at the end of the month!

Does 'spare cash' mean the money left over after the mortgage and major bills have been paid (ie the money you live on- food, nights out etc?) Or does it mean disposable cash which you just haven't got round to spending?

I hope im making this clear enough- I get the impression that i'm rambling!

wymondham

It's not an easy thing to get your head around is it?! (took me months to fully understand it)

Firstly forget about mortgages and the usual mortgage payment - you don't make any payments in this sense of the word with a current account mortgage. Take the money you would normally pay to your mortgage company and add it to any remaining money you have at the end of each month once all bills paid and you have your wages etc.. This is the amount that will come off your mortgage for this month, so you can see that a) it will be very variable and b) often quite large! hence why this type of account is good for getting rid of the mortgage fast.

If you are always skint at the end of the month, then this is probably not the account for you though! (unless you're saving heavily etc??)

FreedomGirl

Hi,

"Spare cash" means money left unspent at the end of the month

Say you earn £2000/month (so at the beginning of the month you have that amount in your bank account. After you have paid all the mortgage and bills, and food, and going out, and clothes, and....(counting everything here, and I mean every last little thing)..."spare cash" is the money left unspent in your bank account at the end of the month, say £400.

OK, strictly speaking, if you are saving money elsewhere that could also be added to "spare cash"

Have a read of some of the other posts to find out more

FG

gawdblesshim

Thanks wymondham and freedomgirl! At the moment i have a lot of money going out to credit cards (on 0% for 12 months) and also a loan we had to take out because our house needed emergency repairs. I suppose once they are gone we would have about 300-400 pounds- but that is about 4 years off for us at the moment!

I was wondering if i could arrange my DD dates so that my loan and credit card payments (and all other bills) came off at the end of the month- would that cash sitting in the account all that time be enough to justify this mortgage?

I would also be looking to habitually take out 0% credit cards and do cash transfers into the current account. I would aim to do this to the tune of 15000-20000 quid on a 70000 mortgage (don't tell the missus!)

Would these circumstances alone justify the account or do i really need the excess cash at the end of the month?

Thanks in advance!

teabelly

In your case would it not be better to pay off the loan with the one account if there is sufficient equity? The interest rate on the oneaccount should be lower than the loan rate (assuming no exit penalty). Also if the loan is unsecured rather than secured unless you are going to have less than 70% ltv if you include it then I wouldn't pay off that loan in one chunk, I'd keep with the monthly payments.

Once you have a large secured overdraft (which is what the oneaccount is really) you will find your spending habits might change and that you'll do anything to keep chipping away at the outstanding balance. I find myself adding up the loose change and wondering whether to pop along to the bank! The best bit is that anything you pay off you can access up to your facility at any time so if you suddenly need a few quid for something it's there.

Stoozing money from 0% credit cards is quite a good idea but you *absolutely must* pay it back before you get stung for any interest as otherwise it isn't worth it.

Money left over at the end of the month can either be a few pounds or you can stooze a few grand and save interest payments which does the same thing.

The headline rates for other deals are better but once you add in arrangement fees and costs for remortgaging every couple of years then they're not as attractive as they sometimes appear. Offsets are only suitable if you have the money in savings already. If not then the one account is good as it focusses your mind on seeing your mortgage as the full amount borrowed rather than small monthly payment ie £600 pm mortgage payment doesn't give you the scariness of £70k borrowed when you can see exactly how much interest is racking up each month and how little extra it does take to start making a dent.

You have to be reasonably disciplined but it is a more grown up way of handling your money as you alone are responsible for deciding whether to have that extra gadget or use the money to reduce your mortgage. In rough times it is also an advantage if you make your facility a bit larger than you need then you always have wiggle room if something happens eg unexpected bill or loss of job.

It isn't for everyone and it isn't always the absolute cheapest way to borrow but it gives a much higher degree of freedom than any other financial product I can think of. I wish I'd switched sooner.

gawdblesshim

Thanks teabelly.

The loan is a funny one because it was lent by the council to pay for repairs to my house. Its 0% for 10 months, and then ill stick it onto a credit card. Added to my current credit card debt that'll come to about 6000 total.

I would plan to pay that combined debt back by around 250-300 pounds a month, not leaving me much extra to put towards the mortgage. If im being honest it would probably be around 50 pounds or so extra going towards the mortgage.

Would stoozing 15-20 grand into the oneacount, and changing my direct debits to maximise interest be enough to make this worthwhile?

teabelly

I don't know for sure. You'd need to get your calculator out! Interest is calculated daily so you'd need to do a spreadsheet with likely balances and compare to a normal repayment mortgage. It might be something a broker could do or the one account may be able to give you a more detailed comparison if you asked them.