Help! How do balance transfers work?

Digital_Dan

Hello.

This may be a stupid question, but can someone please tell me – in simple terms please! – exactly how balance transfers work?

I have two credit cards. A Nationwide Visa card and a MBNA Visa card. I use the Nationwide card exclusively and my MBNA card hasn’t been used for many months.

I always pay my bill off in full each month.

Up until now, I’ve never seen the need to make use of the balance transfer facility, I’ve never read about it and all the junk mail that arrives encouraging me to use it goes straight for recycling unread.

However, I have just purchased something for £2k on my Nationwide visa card. I could dip into my limited savings and pay it off next month.

But if it’s possible to defer payment or repay it on a monthly basis without incurring any interest charges, then I would prefer to do that as I have other expenses on the horizon.

So how does it work?

Do I call MBNA when I get my Nationwide statement? Do they then send me a cheque to pay off my Nationwide credit balance and that then appears on my MBNA statement?

Do I have to pay off a minimum amount each month?

Or can I not repay it until the end of the balance transfer period – which I believe with MBNA, is December 2008?

Or have I got it all wrong?


I believe MBNA charge a fee of 3% for the balance transfer – are there any other charges I could expect?

Any help or advise would very much be appreciated!


Thanks

DD

CLAPTON

How it works

If you have a debt on nationwide CC and you want to balance transfer to MBNA
then you phone up MBNA and ask them to BT, they will ask for the Nationwide CC number and how much you wish to transfer. Sssuming that the amount is within your MBNA limit then they will do this and it usually takes a few days.
Check the Nationwide balance to ensure its worked Ok especially if you are near a pay by date. If in doubt pay the minimum amount anyway on the nationwide CC.
MBNA will expect you to pay the minimum monthly payments in the usually way.

I assume from what you say (although it not clear) that MBNA have offered you a 0% BT period?
In this case you will be charged 3% of the balanced transferred as a fee but assuming you make the minimum payments on time they will charge you no interest until the 0% period runs out. After that they will charge you the usual interest on the then balance.
You may of course choose to pay it off in full.

jamalfatty

You would need to find out your current APR for balance transfers with MBNA first and how long that lasts for, give them a call if unsure (0800 062062).

You would need to make a minimum payment each month but if on 0% this would be next to nothing.

To do the BT, you call MBNA and tell them you want to transfer £x amount and give them your Nationwide card number.

Digital_Dan

Thank you both!

I received a mail shot from MBNA recently and I glanced at it before dispatching it to recycling.

I believe it was a 0% balance transfer offer with an expiry period of December 08 – typically I didn’t look closely at it, as at the time I didn’t think I had the need for the facility at all! :rolleyes:


So once MBNA pay my Nationwide balance, the sum of £2000 would appear on my next MBNA statement and providing I pay the minimum amount or above, I can repay that over the next year?

I intend to pay it all before next December, but presumably if I did not, whatever is remaining would be charged at their normal rate?

Would the 3% fee be added to balance on the MBNA statement?


Thanks again.


DD

CLAPTON

be careful and a bit more precise.

when you say you received a mail shot from MBNA do you mean a specific offer for your current card or an offer fo new members... quite different things.

you need to read the T&Cs for your card but yes the 3% will be added to your balance.
The details of how much you pay each month are part of the T&Cs

Yes if you BT 2000 then that will appear on your MBNA statement probably along side the 3% fee and yes if you don't pay it all off before dec 2008 you will then be charged at the 'normal' interest rate.

Digital_Dan

CLAPTON wrote: »

be careful and a bit more precise.

when you say you received a mail shot from MBNA do you mean a specific offer for your current card or an offer fo new members... quite different things.

Sorry, I'm pretty sure it was mailed to me as an existing card holder, as I say I only glanced at the letter as at the time, I didn't forsee the need for a BT.

I will call MBNA and double check that the facility applies to me prior to making any transfer.

CLAPTON wrote: »

you need to read the T&Cs for your card but yes the 3% will be added to your balance.
The details of how much you pay each month are part of the T&Cs

Yes if you BT 2000 then that will appear on your MBNA statement probably along side the 3% fee and yes if you don't pay it all off before dec 2008 you will then be charged at the 'normal' interest rate.

Thank you once again for your kind help!:T

HannaB

One thing to bear in mind when you transfer...MBNA will probably take your monthly payments off the transferred amount first (because it's 0%). Therefore if you spend on the card, this amount will stay on the card accruing interest.

For example (in very basic terms as I understand it)

Balance Transferred (0%)= £2000
Spent on a gift for Xmas (your usual rate, prob 15.9%) = £200
Total balance on MBNA card = £2200

Make a payment of £250

Transferred amount (0%) = £1750
Xmas gift (still paying 15.9%) = £200

New balance = £1950 + (the 15.9% on the £200 Xmas purchase)

I fell into this trap with my first balance transfer. 3 months down the line I wondered why they were starting to charge me interest.

I hope I haven't confused you further.

CLAPTON

HannaB makes an excellent point

on a 0% BT CC never make any purchases (and obviously never withdraw cash) until the 0% period is over... use two cards if necessary.