Quick query please from a noob

tank666

Hi,

sorry for silly question but I just wanted to ask about a credit card balance transfer. My current company said if I transfer they charge a 5% fee and also the standard interest rate of 18.3%.

Does that mean if I transfer £3,000 to a new card my total charges would be £150 for 5% and a further £549 for the 18.3%?? Sorry if obvious question but wanted to ensure I am doing it properly.

Thank you in advance...:j

jonesMUFCforever

Are you transferring to a free interest credit card?
If not then yes you pay the 5% transfer fee but as long as you make at least the minimum payment during the promotional period you should not be charged interest.

If you are transferring to a card without a promotional period then yes you will pay interest ( a bit pointless really unless you do not qualify for a new card).

tank666

Thank you for reply although still confused, yes I am transferring the balance to a new zero percent card.

I thought my current card company still charge me 5% irrespective of that though? And the 18.3% as well.

eco_warrior

The 5% will be £150 and that will be charged up front. But the 18.3% will be the annual percentage rate. So the amount you will pay on the £3000 will be charged monthly and will vary depending on your average daily balance. So basically no, it won’t be £549. It could be more or could be less, depending on how long you take to pay off the £3000.

This is why people go for 0% deals.

tank666

Thank you but I don't think I explained myself properly. My card company I am with NOW who I am leaving said they will charge the 5% fee and 18.33% to move my balance from them to the new card company.

So I am trying to work out how much I pay my card company I am with now to leave them. I know the new company I am moving to will be zero percent so I won't pay an interest during the promo period.

Hope that makes sense sorry if I am being thick.

eco_warrior

Sorry I’ve missed your last post

You won’t be charged a fee by your current credit card provider for transferring to another one. You’ll be charged interest up until the day you pay it off though, assuming it’s on the APR you mentioned

tank666

Oh really? I thought (very fairly) they would charge me a fee to claw back some of the money they are losing from me switching cards?

eco_warrior

A balance transfer is just a different way of paying off a credit card. Your current card provider will just receive a payment, like any other. There shouldn’t be a fee for paying it off, like a loan for instance.

tank666

Ok cool so I don't pay them 5%.

But I carry on paying 18.3% to them until the balance transfer has been completed. Is that correct?

eco_warrior

Yeah if that’s the rate you are on then you will be charged interest up until the day you settle the full balance.

This means you’ll have interest to pay the following month, which once settled, means you’ll have nothing further to pay.

tank666

Oh right thanks. I am still surprised as if someone was clever enough they could get a card with say 3k on at zero percent. Then transfer at the right time without ever having paid the original card lender any interest? So the card company doesn't make any profit???