Confusion with a %0 balance transfer from Virgin to Barclaycard

Woodstock2020

Hi there, 

I've recently transfered approx £7400k from Virgin to Barclaycard using their %0 for 30 months offer.

The minium payment with Virgin was £74 a month; with Barclaycard it's now almost £300. I had assumed that I'd pay a similar amount as both cards had %0 interest. 

There was a £240 fee for transferring to Barclaycard but I don't understand why the minumum payment has jumped up so much.

Can anyone explain why there could be such an increase? In simple terms, please. My maths is terrible!

Ozzig

Is the minimum payment % for each card different? For example Barclaycard Rewards say ...

Minimum Repayment

Your minimum payment will be the highest of the following:

£5 (or the total outstanding balance if it’s less than £5)

3.75%* of your main balance, plus any instalment plan payments due for that month (if you have any instalment plans on your account)

An amount equal to any interest, default fees or account maintenance fees that have been added to your account since your last statement. Plus 2.5%* of the rest of your main balance and any instalment plan payments due for that month (if you have any instalment plans on your account).

If you choose to only make the minimum payment each month, it’ll take you longer and cost you more to clear your balance.

* This % is an example and is based on this particular offer. Your actual minimum payment will be subject to application, financial circumstances and borrowing history, and will be confirmed in your terms and conditions.

Ozzig

The Virgin search result says...

Your minimum payment amount will be shown on your statement and will either be the greater of:

• £25, or the entire balance if it’s less than £25
• The interest, any default charges and annual card fee, plus 1% of the remaining balance.
• The amount we tell you under section 9.2 of your agreement.  This might happen if your account is in ‘persistent debt’. That’s where you’ve paid more towards interest, fees, and charges than the amount you’ve borrowed from us over the past 18 months. We'll get in touch first before anything changes.

 

The minimum payment must be in your account by the payment date shown on your statement. You’ll lose any promotional rates if you don’t make the minimum payment.
 

Ozzig

So potentially you've gone from 1% to 3.75%

Dare I ask, did you compare them before moving the debt ?

Woodstock2020

Hi Ozzig. Assume so. Trying to find my Virgin rates.
Thing that's confusing me is that I'll have paid off the Barclaycard in a approx. 2 years if I'm paying £288 a month. Which could be seen as an upside, but I don't have £288 spare a month. I had assumed I'd be paying a similar amount to Virgin per month.

CliveOfIndia

Woodstock2020 said:

The minium payment with Virgin was £74 a month; with Barclaycard it's now almost £300.

As per the previous poster, it sounds like it's simply a case that the minimum payment on Virgin was 1% of the balance, with BC it's 3.75% - that certainly ties in with the figures you've quoted.  This does mean, of course, that you'll repay the total amount more quickly with BC than you would have Virgin, which is beneficial.

Woodstock2020 said:

I had assumed that I'd pay a similar amount as both cards had %0 interest.

The amount of interest you'll pay will be the same (i.e. zero) on both cards.  But it's important to read the T&Cs before you sign on the dotted line - all cards have different minimum payment percentages, and these will be clearly detailed in the T&Cs which you read before you agreed to them.

Wonka_2

Woodstock2020 said:

Hi Ozzig. Assume so. Trying to find my Virgin rates.
Thing that's confusing me is that I'll have paid off the Barclaycard in a approx. 2 years if I'm paying £288 a month. Which could be seen as an upside, but I don't have £288 spare a month. I had assumed I'd be paying a similar amount to Virgin per month.

Oh dear - and there's now the potential that if you transfer back you may not get the same low level of 'minimum payment' - 1% is very low and wouldn't cover the interest on £7.4k on most interest bearing cards

Presumably you have a contingency if £288pm is unaffordable ?

Ozzig

CliveOfIndia said:

I had assumed that I'd pay a similar amount as both cards had %0 interest.

The amount of interest you'll pay will be the same (i.e. zero) on both cards.  But it's important to read the T&Cs before you sign on the dotted line - all cards have different minimum payment percentages, and these will be clearly detailed in the T&Cs which you read before you agreed to them.

Could turn out to be an important but expensive (monthly) lesson to learn. 

CliveOfIndia

Woodstock2020 said:

I had assumed I'd be paying a similar amount to Virgin per month.

It's never a wise move to make assumptions, even more so for anything to do with finances.  I know the T&Cs of contracts are not exactly riveting bed-time reading, but it's so important to understand what you're signing up for.

Woodstock2020 said:

I don't have £288 spare a month.

OK, in the immediate term it's really important that you do make the minimum payment each month.  If you don't then you'll be hit with a late payment fee, and the 0% deal will usually be immediately withdrawn, meaning you start paying interest at the card's standard rate.

See if you can shift the debt to another card which has a lower minimum payment percentage.  But do bear in mind, you need to have a plan in place to repay the entire debt by the time the promotional rate expires - there's absolutely no guarantee that you'll be able to shift any remaining balance again.

It may also be worth popping on over to the Debt-Free Wannabe board and post up an SOA, see if there's somewhere you can make cutbacks in your expenditure to free up more money each month.

Woodstock2020

Ozzig said:

So potentially you've gone from 1% to 3.75%

Dare I ask, did you compare them before moving the debt ?

Erm.......nope

Woodstock2020

CliveOfIndia said:

Woodstock2020 said:

I had assumed I'd be paying a similar amount to Virgin per month.

It's never a wise move to make assumptions, even more so for anything to do with finances.  I know the T&Cs of contracts are not exactly riveting bed-time reading, but it's so important to understand what you're signing up for.

Woodstock2020 said:

I don't have £288 spare a month.

OK, in the immediate term it's really important that you do make the minimum payment each month.  If you don't then you'll be hit with a late payment fee, and the 0% deal will usually be immediately withdrawn, meaning you start paying interest at the card's standard rate.

See if you can shift the debt to another card which has a lower minimum payment percentage.  But do bear in mind, you need to have a plan in place to repay the entire debt by the time the promotional rate expires - there's absolutely no guarantee that you'll be able to shift any remaining balance again.

It may also be worth popping on over to the Debt-Free Wannabe board and post up an SOA, see if there's somewhere you can make cutbacks in your expenditure to free up more money each month.

Thanks. Yes, it will clear the debt much quicker, so I'll just suck it up. And smack my own wrist for making assumptions. Thanks lots for your help, both.