Is a balance transfer card worthwhile?

CC21x

Hi all, 

Atm I have an RBS credit card with an apr of 10.5%, I don’t often use use it, maybe for the odd larger purchase etc and I make sure I always pay above the minimum every month.  

From what I am aware 10.5% is quite a good rate so I wouldn’t want to do away with this card altogether, the balance currently is around £1300.  

I wondered if it would be worth getting  the HSBC purchase plus card with up to 20 months of interest free purchases and up to 17 months for balance transfers?  If I were to do a balance transfer would my current RBS credit card still be active? It wouldn’t completely end the account by doing a balance transfer?  I am aware there are other credit cards out there, but felt this one with the requirements etc could be suitable. 

Thanks in advance 

MorningcoffeeIV

It's worth it if you want to save on interest, but if you're only very slowly chipping away at an interest bearing debt, you may struggle to get accepted for a decent offer.

CC21x

I always pay between £100 and £200 per month to it which is fine. It just seems that by the time that one  purchase is nearly cleared off II’ve perhaps used it for another large purchase, so never seems to be cleared completely.  It’s not the bare minimum payments I make I just don’t pay it off completely every month.

To be honest I hadn’t really thought about doing a balance transfer as I know it’s not a huge amount,  but always see on here etc that if you can switch to something that saves on the interest then why not? 

CliveOfIndia

CY24 said:

I always pay between £100 and £200 per month to it which is fine. It just seems that by the time that one  purchase is nearly cleared off II’ve perhaps used it for another large purchase, so never seems to be cleared completely.

Ideally you need to be paying it off in full every month, and not making further purchases if you are unable to do so.  Carrying a balance from month to month is costing you a fair bit in interest, as well as making you look less than favourable to other lenders.

Having said that, as far as it goes then yes - transferring to a 0% card will save you money in terms of interest, and won't cause your current card to be immediately closed.

CY24 said:

if you can switch to something that saves on the interest then why not? 

The biggest danger is that you do the switch, pay just the minimum each month to the 0% card, and have no plans to clear it by the time the promotional rate expires.  In that scenario, any remaining balance will start attracting interest at the card's standard APR, which is likely to be quite a bit higher than your existing card.  And if you've also been spending on the RBS card in the meantime, then you're in a worse position than when you started.

Playing the switching game is fine until the available offers start to dry up.  A more pragmatic approach is to reduce your expenditure, don't buy things you can't afford, and make sure you clear the card in full each month.  If this seems unachievable at first glance, then the Debt-Free Wannabe board is a great source of help and advice.

Richard1212

Get the HSBC card ( if you're accepted, which seems likely , especially if you tell them you are going to make a balance transfer) , then make said transfer of £1300 into it ( and YES, your RBS Card will remain an open account for you to use again anytime in the future).
Then pay off your HSBC £1300 within 17 months -----and you are a winner who has saved money. Good luck 

CC21x

The plan is to do the switch, pay above the minimum balance as I currently do with this card and pay it off within the 0% term, otherwise there would be no point in doing it as the APR would be higher than on my current card. 

Switching isn’t something I have ever done before, as I don’t really like the idea of continually jumping around to the next O%, as they would eventually run out and I feel not be great on your credit history.  I just thought am I missing on saving on the interest by not switching which has now brought me round to considering it.



 

MrFrugalFever

Hi,

Firstly, do double check your RBS card interest rate by checking your latest statement, with the constant increases we have seen in the Bank of England Base Rate (now at 5.25%) Credit facilities like credit card and loan providers have been very quick to increase APR's (unless a fixed rate loan). One of my credit cards started with a reasonable 14.9%APR and now due to the ever increasing base rate it has reached 18.90%APR.

The reason I say this is because that may sway your decision to Balance Transfer if your interest is higher.

If considering the HSBC card, ensure you complete an 'Eligibility check' on the HSBC website NOT a credit broker like Clearscore / Credit Karma et al. If you have a good chance then it may be worth the punt. If you are not pre-approved by them but have a great chance of acceptance then you may find your 0% period is reduced from say 17 months to 14 months (for example).

Once you've applied for the card, most allow a balance transfer at application stage providing you've indicated that it is your intention to do so. You'll need the RBS card to hand to do this. Once the transfer has been approved, HSBC sends the money to your RBS credit card and includes the fee for doing so, leaving you with a balance on your HSBC card including the fee for transferring. Your RBS card will remain open and be ready for use again, however, should you continue to spend on that card whilst paying off your HSBC card you may find yourself in a worse situation and then the 0% Balance Transfer would become a bit of a pointless exercise.

Good luck on whichever route you take,

Chrysalis

Its a sound idea, but just the caveat you need to be disciplined with the old card once its balance is cleared.

I saved a fortune by using 0% balance transfer cards.

CC21x

MrFrugalFever said:

Hi,

Firstly, do double check your RBS card interest rate by checking your latest statement, with the constant increases we have seen in the Bank of England Base Rate (now at 5.25%) Credit facilities like credit card and loan providers have been very quick to increase APR's (unless a fixed rate loan). One of my credit cards started with a reasonable 14.9%APR and now due to the ever increasing base rate it has reached 18.90%APR.

The reason I say this is because that may sway your decision to Balance Transfer if your interest is higher.

If considering the HSBC card, ensure you complete an 'Eligibility check' on the HSBC website NOT a credit broker like Clearscore / Credit Karma et al. If you have a good chance then it may be worth the punt. If you are not pre-approved by them but have a great chance of acceptance then you may find your 0% period is reduced from say 17 months to 14 months (for example).

Once you've applied for the card, most allow a balance transfer at application stage providing you've indicated that it is your intention to do so. You'll need the RBS card to hand to do this. Once the transfer has been approved, HSBC sends the money to your RBS credit card and includes the fee for doing so, leaving you with a balance on your HSBC card including the fee for transferring. Your RBS card will remain open and be ready for use again, however, should you continue to spend on that card whilst paying off your HSBC card you may find yourself in a worse situation and then the 0% Balance Transfer would become a bit of a pointless exercise.

Good luck on whichever route you take,

Thank you, that’s really helpful information, I have checked the rate again on the app.  To be honest I know I have some debt on the credit card but It’s not something I frequently use so my intention would be to keep the card cleared.  If I was to go ahead with the hsbc card and if I had to use a credit card then the hsbc one offers so many months 0% on purchases, if it was within this time.   However it’s not my intention.  The RBS one I would like to keep open due to the rate on it being better should it really need to be used further down the line. 

I’d definitely try the eligibility calculator on hsbc first.  I’ve only ever had the RBS card, so no idea how these things go with chances of acceptance, so I’d like an idea first.