Advise needed on B/T rates and promos

cornish_donkey

Hi I have 2 credit cards coming to the end of their balance transfer promo rates, 1 is Virgin money and 1 is MBNA and each have around £5000 on them.
I applied for a Halifax 0% card and was given a £9000 0% for 14 months with a 4% transfer fee so I transferred the MBNA balance on to it.
I now have the option to transfer my Virgin card onto my old MBNA card but I'm not sure which offer is best and which card I should try and clear first?
MBNA are offering me 0% over 18 months for a 4% fee or 3.9 P.A with a 0% fee for 36 months
can anyone help with this please as I'm not too sure what 3.9% P.A means for me? I will probably be paying more to Halifax per month as their minimum payment is 2.5% of the balance whereas MBNA is 1%
Thank you

Brie

P.A. means per annum, or basically per year.  It's a bit of a fuss to try to do an exact compare but the 4% fee is a one off payment for 1.5 years whereas you'll be something like 6% for the 3.9% PA deal.  

cornish_donkey

Brie said:

P.A. means per annum, or basically per year.  It's a bit of a fuss to try to do an exact compare but the 4% fee is a one off payment for 1.5 years whereas you'll be something like 6% for the 3.9% PA deal.  

So what would you do? Sorry for being a little dim but I still don’t quite understand it all. What would the interest be per month?

Brie

Some quick maths done and by no means would I suggest they are really really accurate but 4% for 18 months does look a better deal.

Working on the basis that you are going to transfer £5000 total the 4% fee would load £200 up front and so you would then need to be paying £5200 off.  So after 18 months with minimum payments of 1% of the monthly total you would have a cost of £200 and have a remaining balance of about £4340 that you either need to pay off in full or find another BT deal.

If you go for the 3.9% for 36 months there is no up front fee (from what you've said) but there is monthly interest that will need to be paid off. After 18 months assuming the same 1% minimum payment in this deal you would have paid off about £276 in interest (so worse than the £200 on the 4% deal) and still have about £4423 left to pay (again worse).  But the positive here would be that you would still have another 18 months to get something sorted.  Now this is assuming it's 1% minimum payment for this 3.9% deal and not paying it all off in 36 months which it may be.  If that is the case and you paid a set amount every month of £147.50 you would clear the full amount in the 36 months.  At 18 months in you would have paid about £226 in interest (so still worse than the 4% deal) but by the end would have paid only about £306 in total.  It's this last bit that may be the deciding factor as with the 4% deal you would still need to find a way to pay off the balance after 18 months so as long as you can afford £147.50 each and every months this may in fact be the preferred option.

cornish_donkey

Brie said:

Some quick maths done and by no means would I suggest they are really really accurate but 4% for 18 months does look a better deal.

Working on the basis that you are going to transfer £5000 total the 4% fee would load £200 up front and so you would then need to be paying £5200 off.  So after 18 months with minimum payments of 1% of the monthly total you would have a cost of £200 and have a remaining balance of about £4340 that you either need to pay off in full or find another BT deal.

If you go for the 3.9% for 36 months there is no up front fee (from what you've said) but there is monthly interest that will need to be paid off. After 18 months assuming the same 1% minimum payment in this deal you would have paid off about £276 in interest (so worse than the £200 on the 4% deal) and still have about £4423 left to pay (again worse).  But the positive here would be that you would still have another 18 months to get something sorted.  Now this is assuming it's 1% minimum payment for this 3.9% deal and not paying it all off in 36 months which it may be.  If that is the case and you paid a set amount every month of £147.50 you would clear the full amount in the 36 months.  At 18 months in you would have paid about £226 in interest (so still worse than the 4% deal) but by the end would have paid only about £306 in total.  It's this last bit that may be the deciding factor as with the 4% deal you would still need to find a way to pay off the balance after 18 months so as long as you can afford £147.50 each and every months this may in fact be the preferred option.

Thank you so much for the in depth explanation. I think I will pay off £147.50 per month with the 3.9% P.A rate. It means I pay off £106.00 more this way but if I was to take up the other option I would need to find another BT card and probably end up paying another 4% transfer fee.