interest rate

Sargip123

Hi just after some advice as I cant work it out,  I have approx £6k on a credit card that is coming to the end of an interest free period,  I can move it to another card I already have and there are two offers (the balance will not be paid off in full anytime soon) the offers are 0% for 15 months with a 5% fee (this seems pretty high at £300) of 24 months at 5.9% interest with no fee, which would be cheaper?  I would look for another deal after these finish thanks for any help

Brie

Assuming your minimum payment is 2% then to pay 5.9% for 24 months will cost you nearly £550 in interest.  So the 15 months at 5% fee seems cheaper at least initially.

The problem is that at the end of the 15 or 24 months you will need to find another deal if you haven't cleared the balance.  And you've no idea what that might cost.  

If you have an issue with clearing this you might want to post on the Debt boards to get advice on budgeting etc.  Lots of friendly bods there who have or have had much more debt in the past.  Me included!! 

Ebe_Scrooge

I have to agree with the above.  The 0% with a 5% fee is probably your best bet in the immediate term.

Sargip123 said:

the balance will not be paid off in full anytime soon

This is not a workable solution in the long term

Sargip123 said:

I would look for another deal after these finish thanks for any help

And what happens when you find you're not eligible for any more deals?  I don't wish to be a doom & gloom monger, but who knows what the financial landscape will look like in 24 months?  It might be peachy, and credit may be cheap and easy to come by.  Or, there may be another Covid-type event combined with escalating wars in Russia, in which case it may be that credit is extremely hard to come by.

You really do need to have some sort of a plan to clear the debt rather than just kicking it down the road.

I hope this doesn't sound like I'm preaching, just trying to be sensible and objective.

Marchitiello

All good advice above but would also look at some of the current deals for 0%  interest. The M&S card offer over 30 months interest free for a 1.99% fee for example but there are also shorter time deal at 0 fee. Whatever you do, you need a plan to start tackling it so that in whatever time you extend the payment at low/0% interest, you actually make a sizeable  dent into the actual balance. 

grumbler

Sargip123 said:

Hi just after some advice as I cant work it out,  I have approx £6k on a credit card that is coming to the end of an interest free period,  I can move it to another card I already have and there are two offers (the balance will not be paid off in full anytime soon) the offers are 0% for 15 months with a 5% fee (this seems pretty high at £300) of 24 months at 5.9% interest with no fee, which would be cheaper?  I would look for another deal after these finish thanks for any help

Ignoring the minimum payments, 5.9% means approx 5.9*15/12=7.35% for 15 months - obviously much worse than 5% for 15 months.

As simple as that

Brie

grumbler said:

Ignoring the minimum payments, 5.9% means approx 5.9*15/12=7.35% for 15 months - obviously much worse than 5% for 15 months.

As simple as that

Simple?  I don't get it.  

grumbler

Brie said:

grumbler said:

Ignoring the minimum payments, 5.9% means approx 5.9*15/12=7.35% for 15 months - obviously much worse than 5% for 15 months.

As simple as that

  I don't get it.  

What exactly? That 7.35% is more expensive than 5%?

That's approximate cost of borrowing for 15 months.

If the difference is less noticeable, then, of course, it's worth doing more accurate calculations with monthly payments.

cymruchris

Different people get different transfer fees on their 'offers' depending on their perceived level of risk/credit history. I have a feeling that if your only offer is the 5%, you're on the borderline of getting no offers at all.

As much as you say that you don't think it's going to be paid off anytime soon, I hope you'd get yourself a plan together to see if you can knock a dent in the balance (even if you can't pay it all off). I would say that if you go for this transfer - once the deal is at an end - if the balance hasn't moved - be prepared to start paying some hefty interest.

If however you can show a pattern over this promo of the balance dropping, you might be in a better position for a further offer when the time comes. At the moment I might say that you are a candidate that might look like you have 'persistent debt' if your balance never goes down, which is why you're not seeing the best offers.

0% offers may not be around forever - even with high transfer fees. Keep that in mind as well. How would you manage if you had to start paying interest at whatever your APR is - 24.9%? 29.9%? Higher still?