Money Transfer to gain interest?

Lewis7498

Hi everyone,

I’m a newbie and so delighted to find this forum and hear everyone’s opinions!

I’ve been offered a money transfer on my credit card at 2.6% for up to £10K. My plan is to either pay it off my mortgage (£87K left at 2.09% until April 23 then likely to be 6%) OR put it in fixed savings at 4.55% for one year and just pay the minimum monthly repayment and make a couple hundred pounds at the end.

Can I ask what everyone’s thoughts are?

md258

If you put it towards your mortgage, do you have a plan to pay it off when the interest free period ends? I presume the money transfer is interest free?

And check what the minimum payments will be- 2.5%? 5%? per month and make sure you can cover these.

The principle is correct, although you won't be able to make 4.55% - 2.6% profit on the whole £10k as some will be needed for the minimum payments. As the difference is so big, that shouldn't be an issue, but if it was 3%, the maths might not work out.

Lewis7498

Thank you for replying @md258
I was planning on paying the minimum payment (yes it’s 0% for 18 months it’s just the initial 2.6% so £260 on £10K) and then balance transferring with no fee after that.

I normally overpay on my mortgage a bit too so would use some of that to pay it.

If I didn’t pay a lump sum off the mortgage, I planned to make the minimum payments for the £10K out of my own money and then leave the lump sum in savings gaining 4.55% so would give me £195 profit at the end.

Im not sure how to work out which option is best

masonic

Seems like the optimal solution would be to stick it in a savings account until at least April (6 month fix?). It can't be used to permanently decrease your mortgage, as it needs to be repaid in 18 months. It could be used when you remortgage at a higher rate, if you can save enough to pay off the card over the next year (assuming new mortgage rate is higher than your net savings rate.

noh

To calculate the potential profit you can use the calculator here.
https://stoozing.com/stoozcalc.php