Calculating Balance Transfer Interest

9 Posts

in Credit cards
I have £12k that I need to do a balance transfer for, and I have two offers.
1. 0% APR with a 3.5% fee for 12 months
2. 4.9% pa with a 0% fee for 48 months.
I will be paying £300 per month and will definitely need more than 12 months, but how do I calculate the potential interest on the 4.9% offer so that I can compare to the 0% offer to see which would potentially be the best option?
I have 3 other credit cards with zero balance, and I usually have balance transfer offers available each month, although I know it's not guaranteed I should be able to do another transfer in 12 months when needed.
Any suggestions would be appreciated.
1. 0% APR with a 3.5% fee for 12 months
2. 4.9% pa with a 0% fee for 48 months.
I will be paying £300 per month and will definitely need more than 12 months, but how do I calculate the potential interest on the 4.9% offer so that I can compare to the 0% offer to see which would potentially be the best option?
I have 3 other credit cards with zero balance, and I usually have balance transfer offers available each month, although I know it's not guaranteed I should be able to do another transfer in 12 months when needed.
Any suggestions would be appreciated.
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You could estimate what your monthly balance will be until you pay if off and use a monthly rate, for a rough idea. As an example if you paid it all over within 12 months, it would give you an average balance of 6k, with interest of £294.
So if I paid £300 per month would I be correct is saying as very rough figures for comparison to a transfer fee:
End of Yr 1: Balance £8400 x 4.9% - £411 interest for the year
End of Yr 2: Balance £4800 x 4.9% - £235 interest for the year
End of Yr 3: Balance £1200 x 4.9% - £58 interest for the year?
If these numbers a roughly in the ball park, then the interest isn't far off balance transfer fees of 5%, which is typically the highest I've ever been offered. Or am I completely misunderstanding?
I like the idea of having it at a set rate for 48 months, especially with the way things are now and balance transfers options are never guaranteed. But I want to try and get the best value interest wise.
I can probably afford to pay £400 or £500 per month, but I can guarantee £300 without any doubt, so I suppose when I can do a higher amount it will be a bonus to knock off a bit more of the interest.