0% for 16 months (3.5% fee) or 3.9% for 36 months (no fee)

purplelemon

I have £7200 on a credit card that is coming to the end of an interest-free offer.

I'm wondering which of the following balance transfer offers would be best for me to take up:

• 0% for 16 months (3.5% fee)
• 3.9% for 36 months (no fee)

I am paying a fixed payment of £110 per month to the card (so will not expect to have paid this balance off after 36 months). (Although I do hope to be able to increase this in 2 years time).

Looking for suggestions on which offer I should take. Is the 3.9% safer? As it's locked in for 3 years? If I went for the 0% offer, presumably there is a chance that in 16 months there won't be any similar offers available to move the balance to?

Willing2Learn

If it were me, I would go with the one that my monthly budget says I can afford to pay off in full, once I have reached the end of the promotion

purplelemon

Willing2Learn wrote: »

If it were me, I would go with the one that my monthly budget says I can afford to pay off in full, once I have reached the end of the promotion

Not possible, unfortunately, this is one part of an existing debt plan. The rest of which is working fine.

Maybe it just comes down to this: Are balance transfer offers on their way out? If so, then I should take the longer 3.9% one, even if it would cost me a little bit more than multiple 0% offers?

Willing2Learn

jcwacky wrote: »

Not possible, unfortunately, this is one part of an existing debt plan. The rest of which is working fine.

In that case, I would go with the one with lowest APR

Terry_Towelling

Just done some rough calculations (someone shout if they disagree).

With the No-fee, 3.9% interest offer and paying £110 per month for 36 months you'd still have about £3900 outstanding debt at the end of the deal.

With the 3.5% fee and 0% interest for 16 months and paying the same amount you'd have about £5700 outstanding debt after 16 months.

If the 16 month 0% deal actually lasted for 36 months you'd still have about £3500 left to pay at the end of 36 months. This is only about £400 less than the no-fee option will leave you with.

What this suggests to me is that you'd be better off taking the route that gives the most certainty for the longest period (i.e. the 36 month deal). During that period keep your eyes peeled for more BT offers and consider switching to them if they create a better outcome beyond the current 36 month time frame.

Sharon87

Are there other possible cards you could transfer any of the balance to? 3.5% is quite a high (but standard) fee. If you were to get another 16 month transfer at the end and you pay another 3.5% fee on top of what's left you'll be paying more in fees than you would in interest for the 36 months.

I would transfer to the 36 months for now and if any other decent balance transfers come up you can transfer some or all of it to that deal if it's better.

edit: just done a quick calculation of what the interest rates are actually are if you put the fee as an interest rate
2.43% on the 16 month deal on the entire debt (£252 fee for the 16 months)
1.3% on the 36 month deal on the ever reducing debt each month. (ever reducing interest of £23 a month to £12 on the last month of the deal - based on the snowball calculator)

Craig1981

month 16.... the 3.9% you would have a balance of around £5775 remaining
the interest free card (with transfer fee) you would have a debt of around £5692 remaining
lets say you use another card month 16 for 20 months, with same transfer fee, after 36 months total, it would look like this
3.9% card you would have balance of £3872 outstanding
transfer cards, including fees, you would have a balance of £3690
difference - BT cards will save around £180 over 3 years - £5 a month

so at the end, seems like BT with 3.5% is better deal, but doesnt look like much after the 36 months... and thats to say you get another 0% deal after 16 months for another 20 months...

purplelemon

Thanks all, much appreciated! So I think I'll stick with the 3.9% interest for now and if a better (longer period or lower fee) 0% interest offer becomes available at some point then I'll look to move it over to that. Cheers!