Balance Transfer - Can't transfer as low limit?

BillySJ

Hello all,
Forgive me if I have researched incorrectly in the past and confused truths with misconceptions, but I was under the impression that one could take out a credit transfer and then balance transfer that credit to another bank to keep the 0 percent interest going. I have 7.5k outstanding with Virgin which is coming to the end of the 25 month interest free period and so I signed up to Santander who were offering 18 months @ 0 percent with no fee for a balance transfer. I requested the full figure to be transferred and without warning they opened up an account without any mention of said transfer but offered me a limit of only 1.8k. It was my belief that if I'm moving funds and therefore who I owe from one bank to another that it wouldn't make much of an impact on my limit as it's not DUPLICATING the credit, but moving it from one bank to another.

An so I was told I could only move £1200 across. Is that the correct procedure? So in future I need to take into account that I can theoretically only utilise half of my credit limit with a bank so that I would then be able to use the other half to allow it to be transferred to a different bank when the 0 percent interest period runs out?

If that's the case then I am sure I have never read it that specifically anywhere and it seems the info available on such matters really is lacking.

I'd appreciate responses and thoughts on the matter as it looks like I'm going to be paying a load of unexpected interest.

eskbanker

You do have some misconceptions, yes - as far as the new provider is concerned you are duplicating credit availability as they have no guarantee that you'd close down the old card.  You don't get to specify a new credit limit, which is assessed by the underwriters for the new product, and it's normal not to be able to use the entire credit limit for a transfer, although £1.2K out of £1.8K seems low (but isn't half).  Continuing to shunt debt from one provider to another at 0% is indeed handy if you have access to enough credit to be able to pull it off, but there's no automatic right to be able to do so....

BillySJ

eskbanker said:

You do have some misconceptions, yes - as far as the new provider is concerned you are duplicating credit availability as they have no guarantee that you'd close down the old card.  You don't get to specify a new credit limit, which is assessed by the underwriters for the new product, and it's normal not to be able to use the entire credit limit for a transfer, although £1.2K out of £1.8K seems low (but isn't half).  Continuing to shunt debt from one provider to another at 0% is indeed handy if you have access to enough credit to be able to pull it off, but there's no automatic right to be able to do so....

Thanks for your response. I'm a little frustrated as this point isn't made very clear from the info I've viewed, but more fool me I guess.

Question: I imagine that's why the 'initial' balance transfer is usually offered at 0% to stop me moving 1.2k across then waiting for my credit score/limit to adjust itself appropriately and moving money across a small chunk at a time?

eskbanker

BillySJ said:

Question: I imagine that's why the 'initial' balance transfer is usually offered at 0% to stop me moving 1.2k across then waiting for my credit score/limit to adjust itself appropriately and moving money across a small chunk at a time?

I wouldn't see the practice as being specifically for that purpose but it is undoubtedly normal for BT cards/offers to have a finite short window within which to move over a balance - they're not designed or intended for repeated use but to facilitate a one-off transfer.  I don't have any evidence to back this up but it would surprise me if 0% BT cards routinely increased credit limits during the promotional period anyway....

BillySJ

So is my only real option to pay back the loan including amounts of interest with the my current credit card/credit transfer from Virgin until my limit increases to move the rest over to another bank and effectively start again?

[Deleted User]

If you have a loan as well, you would need a money transfer for that, not a balance transfer.  Use the 0% for whichever is the highest rate debt, then focus on overpaying the remaining highest rate debt.

There's nothing to stop you applying for another 0% card, either BT or MT.

BillySJ

Not loan, I meant initial money transfer which is the virgin credit card.
The thing stopping me from applying for more/multiple cards would be the worry that it would lessen my credit score?
So if I'm offered say 1.8k from Santander, would that not mean if I applied for another balance transfer they wouldn't give me anything as Santander as effectively eliminated my available credit across the board or is the limit very specific to each lender?

[Deleted User]

Your score doesn't matter as it's not used for anything.  All that will appear is a search, which in itself isn't a problem.  And since you need to apply to get another 0% deal, it's fine.

A new lender will give you what they feel is an acceptable risk.  Santander don't determine the risk appetite of other lenders.

BillySJ

Of course if I was to spread the 7K over multiple low limit balance transfers meeting the minimum monthly repayment then may become an issue.

Okay so I'll ignore the score to avoid confusion. The clarify, there is no set blanket 'limit' for me viewed by all banks and it is actually set by each individual bank assessing my credit situation at that point in time?

[Deleted User]

That's correct.  Lending is all risk based and every lender sets their own criteria.

BillySJ

And if a lender refused to lend me anything that doesn't adversely affect me in future?