Am I missing something

Norlye

I have £3000 on a 0% card that ends in April. My plan to pay off is that I get a retirement lump sum in September that will clear it. I was going to just transfer across to one of my other cards for the last few months but the best deal is a 3% transfer fee plus paying 2.5% of the balance every month. My current card only requires a 1% balance payment. I don’t want to get another card.

So my crude maths say the 3% transfer fee plus the increase in minimum payment for the 4 months means the 0% deal will be more expensive.
It appears cheaper to just stay with the card for the short term &  counter intuitively accept the interest.
Any thoughts.Glaring errors?

SuperAllyB

You only need to compare the likely interest cost with the balance transfer fee.  The increased minimum payments (as long as you can afford them) will reduce the amount you need to pay off in September.

molerat

What APR does the card go to at end of offer ?  1% balance payment + 1.5% monthly interest on £3K is £75, 2.5% of £3K is £75. 3% fee spread over 4 months is around .75% per month, less than the likely monthly interest. Plus you are not tied into paying it all off ASAP.

msallen

You need to look at what it will cost, not what the payments will be, as some (or all) of the payments will be reducing the final lump sum you have to pay.

Compare the interest charged on the existing card if you keep that, with the fees charged by the new card if you transfer.

cymruchris

Do whatever you can to reduce the capital balance so that you have more of your money in your pocket when the retirement payment comes. If that means making a bigger minimum payment, and you can stretch to it - that's the thing to do. Is there a reason why you don't particularly want a new card at the moment? 

Norlye

Cheers for the responses.
The interest rate will be 20.01% from May. I make that 1.67% per month. That makes £50 interest a month for 4 months. 1% of 3k is going to be £30. So a min payment of £80(ish) per month.
My transfer at 3% is £90 added to the bill so I’m playing catch up over a short period of time plus a higher min rate of 2.5%. It just doesn’t seem worth it.
I am very fortunate that the lump sum will be north of £100k so I will clear all debt in Sept, which is just over £10k.
I have been going minimum payments so I have more spends now as money will be very different come September.
I am a careful and did worry a bit that I couldn’t transfer to a 0% & what would the payments be when I did get charged interest so when I did the sums was surprised that the difference was so small.

Chris, I have 3 cards & a loan. Come Sept I plan to have 2 cards, balance paid off every month, & no loan. I will still need to play by the rules of course, but it will be nice not to got through the whole will I won’t be accepted malarkey. Just a small bit of “ illusionary” freedom.

SuperAllyB

Assuming your calculations are correct, you will pay approximately £200 in interest as opposed to £90 transfer fee so leaving the balance on your current card will cost you roughly £110 extra. As already explained the increased minimum payments don't make any difference as long as you can afford them. They'll just mean the balance to be paid off in September is lower.

redux

Some credit cards have a choice of balance transfer offers, either flat fee and zero interest, which isn't ideal for shorter periods, or no fee and a low annual rate like 3.9 or 4.9%. Five months of that would be about 2%, rather than the 3% or 7.% you're considering.