Balance transfers

Jkfh

Hey,

I'm looking to transfer my balance but I'm getting confused. A lot of the offers say 0% balance transfer but 3%fee ? Do i have to pay to transfer the balance? If so why would I transfer my balance to pay 3% when i can keep it where it is and pay ? Am i missing something.

Am i right in saying if you get a card just to transfer the balance that you can’t buy things on it ? Are you best getting a card for both incase you need to spend ?

Help

[Deleted User]

If there's a fee, then you need to pay that to do the BT. The fee is a one off cost - your interest rate is ongoing.

Ideally, you would get a 0% interest, no fee card, but that may be out of your reach.

You can buy things on a BT card, but you'll pay interest on the purchases unless you clear the full balance each month (there's a couple of exceptions).

For safety, you should separate your purchases onto another card and clear in full.

Willing2Learn

Jkfh wrote: »

... I'm looking to transfer my balance but I'm getting confused. A lot of the offers say 0% balance transfer but 3%fee ? Do i have to pay to transfer the balance? If so why would I transfer my balance to pay 3% when i can keep it where it is and pay ?...

Hi Jkfh and welcome to the forum

Just to add, that even if you pay a 3% BT fee you should still be saving money due to the ongoing 0% APR promotional rate. So that is why the BT card would still make sense

MallyGirl

most credit cards are more like 20% APR so 3% is a much better deal than that. Also you might get the 0% deal for more than a year but the 3% is a one off fee at the beginning - you don't pay it every month.

ndf9876

Just to add to the already sound advice - the 3% fee is added to your balance, you don't need to pay it up-front. It's also typically on the same terms (i.e. 0%) as the rest of your balance (at least, mine was).

PRAISETHESUN

Jkfh wrote: »

Hey,

I'm looking to transfer my balance but I'm getting confused. A lot of the offers say 0% balance transfer but 3%fee ? Do i have to pay to transfer the balance? If so why would I transfer my balance to pay 3% when i can keep it where it is and pay ? Am i missing something.

Am i right in saying if you get a card just to transfer the balance that you can’t buy things on it ? Are you best getting a card for both incase you need to spend ?

Help

As above, the 3% fee is a one-off amount to transfer your balance to a new card. It is cheaper than the 20+% APR on most cards so if you are struggling with debt or want to pay off a purchase over a longer period then this is a viable option which will save money in the long run compared to a standard credit card.

It's generally a good idea to avoid making purchases on BT cards which have a active balance as the order in which repayments get allocated to your balance sometimes get confusing and you may accidentally ending up paying a large amount of interest on a balance you didn't mean to - every card is different so you would need to closely check your T&Cs as there is no one size fits all answer here.

Jkfh

Thanks guys !!

Terry_Towelling

Take care if the promo rate on your BT card is short - i.e. 6 months - especially if you only plan on making minimum payments.

The first thing that will happen on making your BT is that your debt will increase by 3%. On its own that 3% is likely to be equivalent to 2 months interest on your existing card (if your current card charges about 20% APR).

If you then decide to only repay the ever-reducing minimum payment (which on a 0% card will be typically 1% of the balance) it will take around 3 months just to get the debt back down to what it was before you transferred it.

If you did have a 6 month 0% deal (there are some out there with a 3% fee) you'd then struggle to make any impact on it at all in the remaining 3 months (doing minimum payments).

I'm not saying don't do it, I'm saying do your maths, try to get as long a promo period as possible and never pay the minimum - always pay a fixed amount as close as possible to the amount you would have been paying had you left the debt on the old card (or higher if you can).

If that causes affordability issues, you may struggle, but you need to try. Some will doubtless say, the point of doing a BT is to get lower monthly payments, so what's the point in paying the same amount as I was on my old card? They have the wrong mind-set.

Doing a BT to a 0% card should be done to ensure you pay less interest overall and get the debt cleared more quickly. If all you're going to do is pay the minimum then, yes, you'll pay no interest for a while, but the debt will last for a very long time and, if you can't get another BT offer when your promo rate runs out, you'll probably be stuck on a huge interest rate and end up saving little or nothing during the full life of the debt.

As for spending on a BT card, Barclaycard and Nationwide are two cards where you can manage the two together - but only if you are careful with your payments. I'll offer no detail on that here but, generally, it is better not to mix a BT with new spending.