Transfer balance or keep in the Bank?

grayson

I have a credit card which interest free period is due to run out. £4000.
I have an offer on another card for balance transfers for 12 months with a 3% fee.
I have the money in saving account to pay card off which is earning 4.5%, paid monthly.

Do I pay credit card losing interest on savings or transfer balance and pay 3% transfer fee?
Thanks

grumbler

It's a primary school problem.

£4K*3% = £120 - the fee if you transfer the balance and leave £4K in the savings account.

£4K*4.5% = £180 - the interest you'll get on £4K left in the savings account.

£180-£120=£60

The difference will be slightly smaller because of the minimum payments you have to make to the CC. Also, there can be tax due on your savings interest.

grayson

Thanks. I thought that may be the case.