Balance transfer fees

adrianj_2

OK - so one has applied for:

Virgin 15 months 0% with a 2.98% fee. Currently, the Virgin* card offers 0% on 'super balance transfers' for fifteen months at the cost of a one-off fee of 2.98%. To do this, you need to use its credit card cheques (these should come automatically but it may be worth specifically requesting them when you apply). Write one out to yourself and pay it into the bank; simple as that.

Received confirmation that the application has been accept (with a massive credit facility - what credit crunch?).

If one was to do the above "super balance transfer" at a one-off fee of 2.98% what actually happens to this fee? Is it added to the BT and one receives 15 months 0% credit on this fee or does one have to pay this up front or ??

Anyone know the answer?

YorkshireBoy

You shouldn't need to use cheques, since this card offers to transfer your overdraft/loan etc to it (in effect they pay cash directly into your current account). Just check with the telephone based CSA that it'll be given at 0%.

The BT fee is collected with the first minimum payment @ 2.98% + £5, because it's less than 3% of the balance, which is the other option.

Subsequent minimum payments are £25.

All the above is detailed in the summary box and the T&C's.

Make sure you pay on time (DD is best) because Virgin say that from Jan 08 they WILL remove the 0% if you miss a payment (previously they said they "may"). YOU HAVE BEEN WARNED!

russetred

Sorry isn't minimum payment 3% of outstanding balance ie the balance transfer.I'd be delighted to be wrong as I've been accepted for virgin and am about to dip my toe into stoozing.Say BT of 5k would that be £150 first payment?

Milarky

russetred wrote: »

Sorry isn't minimum payment 3% of outstanding balance ie the balance transfer.I'd be delighted to be wrong as I've been accepted for virgin and am about to dip my toe into stoozing.Say BT of 5k would that be £150 first payment?

The actual wording is something like "The least of 3% or interest charges plus any fees plus £5 and no less than £25 in any case" so it's a actually '3 way' conditional statement

1) The min pay shall always be at least £25

2) That min shall be chosen to be either based on 3% of the balance or £5(plus interest=£0 for promo) plus fees

So the first step is deciding if 3% is less than £5 plus any fee and the second stage involves raising that figure to £25 unless it is already greater.

Apart from month 1 - when a 3% fee applies - the £5 plus £nil interest will always be less than 3% of any balance subsequently, so '£5 plus' is option used and this is raised to £25 as the automatic minimum for months 2,3,4 etc

mike_wall15

The wording is crap, but I believe that it'll be a minimum payment of 3% each month.

This is why stoozing isn't so great, because of the huge minimum payments.
Correct me if I'm wrong.

Mike

YorkshireBoy

mike_wall15 wrote: »

The wording is crap, but I believe that it'll be a minimum payment of 3% each month.

This is why stoozing isn't so great, because of the huge minimum payments.
Correct me if I'm wrong.

You're wrong!

I've already posted the minimum payment information for this particular card (and other MBNA run cards) in post #2.

mike_wall15

YorkshireBoy wrote: »

You're wrong!

I've already posted the minimum payment information for this particular card (and other MBNA run cards) in post #2.

I've read over the terms a few times in my head and I can see why you have stated what you have.
My question would be, why are they being so different in collecting such a small minimum amount compared to other credit card companies?

Personally, I'd want to call them or hear first hand experience that the minimum amount is £25 before going ahead. Can anybody answer? :beer:

Clariman

mike_wall15 wrote: »

I've read over the terms a few times in my head and I can see why you have stated what you have.
My question would be, why are they being so different in collecting such a small minimum amount compared to other credit card companies?

Personally, I'd want to call them or hear first hand experience that the minimum amount is £25 before going ahead. Can anybody answer? :beer:

Yes, they already have. Yorkshireboy has answered it definitively. He along with myself and 100s of others have used MBNA cards for many years of stoozing. Up until recently, the normal monthly payment was £5 but, for most of their cards, it is now £25. The reason that they have such a low minimum payment will be to maximise their interest earnings. If they have customers paying such a small monthly payment then the customers will never pay the card off, this earning MBNA more interest. It is very bad for debtors, but excellent for stoozers.

Clariman

YorkshireBoy

mike_wall15 wrote: »

My question would be, why are they being so different in collecting such a small minimum amount compared to other credit card companies?

After 12 months you've paid peanuts off your debt. They hope, through inertia or change of personal circumstances, you don't/can't shift the balance elsewhere. You're then paying 15.9% APR (or 34% APR as has been posted on the credit card board several times recently). In other words, there's method in their madness. It's called 'speculate to accumulate'!

Personally, I'd want to call them or hear first hand experience that the minimum amount is £25 before going ahead. Can anybody answer? :beer:

The T&C's provide the answer...

1b The minimum payment, that you must pay by the payment due date shown on your statement each month, will be as follows:

· if the balance shown on your statement is £25 or less, it will be the total amount of the statement balance; or (can be ignored as balance >£25)

· if the balance shown on your statement is more than £25, it will be whichever is the least of 3% of the statement balance or

the total of any Payment Protection Cover charges, interest, handling fees and default charges plus £5.00, provided that it will always be at least £25.



Source: Virgin T&C's

Assuming a £10,000 BT to the card, balance is now £10,298

Option 1: 3% of £10,298 = £308.94

Option 2: £298 + £5 = £303.00

£303.00 is LESS than £308.94, so 1st min payment is £303.00


Month 2: New balance is £10,298 - £303.00 = £9,995

Option 1: 3% of £9,995 = £299.85

Option 2: £0 + £5 = £5 (but it must be at least £25)...so £25.00

£25.00 is LESS than £299.85, so 2nd minimum payment is £25.00


Subsequent months are also £25.

mike_wall15

Super, thanks for confirmation. Without the use of brackets in the long complicated sentence for 'minimum payment' on the MBNA site I found it hard to see which way it meant! :rotfl:
And as it's a crucial part of making a profit in this equation I thought it was best to check.

Cheers, Mike

mike_wall15

Cheers for that explanation yorkshireboy, if I'd been on here for longer I would have known to trust you first time

The reason I was unsure was because:

*****************

- if the balance shown on your statement is more than £25, it will be whichever is the least of 3% of the statement balance or

- the total of any Payment Protection Cover charges, interest, handling fees and default charges plus £5.00, provided that it will always be at least £25. (if a stoozer didn't have any charges then it would only be £5 for this option, therefore less than £25, and so this part of the statement wouldn't be true)

*****************

I know it's an odd way to see things, that's the coder inside of me! :rotfl:
:j