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Cost of fee?

Options

Help my menopause brain please.

2.5% MT fee with 0% interest for 1 year.

On £10000, how much will the fee be?

And it will earn money if I put it into 3.7% savings, yes?

Is it better generally to have a 0% fee or 0% interest? Worked examples on £10000 would really help me out.

Thanks

«1

Comments

  • eskbanker
    eskbanker Posts: 36,964 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic

    2.5% MT fee with 0% interest for 1 year.

    On £10000, how much will the fee be?

    £10K * 2.5% = £250

    And it will earn money if I put it into 3.7% savings, yes?

    £10k * 3.7% = £370

    Is it better generally to have a 0% fee or 0% interest?

    It depends on the rates involved on the other side of the equation (i.e. how much interest if it's a zero fee, or how much fee if it's 0% interest) and the period over which you wish to compare, fees being a one-off and interest being ongoing.

  • daivid
    daivid Posts: 1,286 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    The minimum payments each month will eat into your profits (as each month you will have to fund these reducing the amount you have in savings), so check that detail too, however you would still make a profit with typical minimum repayments (mine are between 1 and 2.5%). Wether you think the amount of profit is worth it is another matter.
  • vicker
    vicker Posts: 193 Forumite
    Part of the Furniture 100 Posts Combo Breaker I've been Money Tipped!
    Thanks both. Much appreciated.
  • MrFrugalFever
    MrFrugalFever Posts: 1,301 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    Given the minimum payments required each month to service the credit card, I don’t believe the return would be great enough to take on the risk of £10k debt in my opinion.
    For example, my Barclaycard minimum payment is £5.00 or 3.25% whichever is higher.

    3.25% of £10,000 in month 1 is £325, thus leaving you with £9,675 in savings, month 2 will then be £314.44 minimum payment, thus leaving you with £9,360.56 in savings and so on, granted there will be interest applied (if monthly paid) and compounded which will increase your pot very slightly.

    The interest gained will not be £370 for the year on a 3.7% AER account due to this, it will be less.

    Personal choice at the end of the day.
    If you believe you can, you will. If you believe you can't, you won't.

    Secured/Unsecured loans x 1 
    Credit Cards x 8 (total limit £55,050)
    Creation FS Retail Account x 1
    Creation Credit Sale 0% x 1 = £112.50pm x 20 mths
    0% Overdraft x 1 (£0 / £250)
    Mortgage Outstanding - £137,707.00 (Payment 13/360)
    Total Debt = £7,400 (0%APR) @ £100pm - Stoozing

  • surreysaver
    surreysaver Posts: 4,795 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Given the minimum payments required each month to service the credit card, I don’t believe the return would be great enough to take on the risk of £10k debt in my opinion.
    For example, my Barclaycard minimum payment is £5.00 or 3.25% whichever is higher.

    3.25% of £10,000 in month 1 is £325, thus leaving you with £9,675 in savings, month 2 will then be £314.44 minimum payment, thus leaving you with £9,360.56 in savings and so on, granted there will be interest applied (if monthly paid) and compounded which will increase your pot very slightly.

    The interest gained will not be £370 for the year on a 3.7% AER account due to this, it will be less.

    Personal choice at the end of the day.
    With Barclaycard (other providers may be the same), you can make purchases up to the amount of the minimum payment each month to avoid eating into the savings, and therefore, profits 
    I consider myself to be a male feminist. Is that allowed?
  • MrFrugalFever
    MrFrugalFever Posts: 1,301 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    I guess so but then mixing purchases and promotional balances is rarely something which is encouraged. If you have a big enough limit say £20k plus then I’d say it would be worth it perhaps.
    If you believe you can, you will. If you believe you can't, you won't.

    Secured/Unsecured loans x 1 
    Credit Cards x 8 (total limit £55,050)
    Creation FS Retail Account x 1
    Creation Credit Sale 0% x 1 = £112.50pm x 20 mths
    0% Overdraft x 1 (£0 / £250)
    Mortgage Outstanding - £137,707.00 (Payment 13/360)
    Total Debt = £7,400 (0%APR) @ £100pm - Stoozing

  • surreysaver
    surreysaver Posts: 4,795 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Definitely have to keep on top of what you're doing if mixing purchases and promotional balances. Just hope I never have to claim a refund on something I've bought - that would definitely confuse me!
    I consider myself to be a male feminist. Is that allowed?
  • 0% fee is better if you use the card you are doing the money transfer from as a 'mule card'. The interest rate is irrelevant as you immediately transfer the balance to a fee-free 0% balance transfer card (such as the NatWest 19 month card currently on offer). You may have to pay a day or two's interest, but that will only be pennies. I have just done this, and now have £5000 sitting in a savings account paying over 5%.
  • Did the MSE pre approval check and applied for a pre approved Virgin Credit card. My application has just been declined. Very disappointed. Has this happened to anyone else?
  • CliveOfIndia
    CliveOfIndia Posts: 2,495 Forumite
    1,000 Posts Second Anniversary Name Dropper
    George51 said:
    Did the MSE pre approval check and applied for a pre approved Virgin Credit card. My application has just been declined. Very disappointed. Has this happened to anyone else?
    Yep, this has happened to lots of other people.  An eligibility check is, at  best, a rough guide as to your likelihood of being accepted.  Going to a lender's own eligibility checker tends to give slightly more accurate results than a generic third-party checker - but even then, it's only a guide.  It's not until you make a full application and they perform a hard search that a lender can make a final decision.
    There's no need to be disappointed, it's nothing personal - that's just how all credit applications work.
    You could try one more application with a different lender (use their own eligibility checker first), but if you're rejected again then leave it at that.  More than a couple of hard searches in a short space of time starts to ring alarm bells for lenders.

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