Interest rate confusion

angelyaz

Hi,
I am pretty good with numbers but am getting myself in a pickle with an upcoming 0% deal ending and would appreciate some advice from a wiser forumite please.

Currently on the same credit card I have:
£2062 at 0%, rate ending 27/02/24
£2816 at 3.9%, rate ending 19/05/25
£3273 at 5.9%, rate ending 06/11/25

I have a promo offer of 0% for 12 months with a 5% fee on that same card, for BT and MT, and enough space to transfer >£9k.

I plan to pay off £250 per month minimum.

My idea was to (when my current 0% rate ends) get a MT for the whole remaining balance then use it to pay off that credit card, so essentially I’d have the same debt +5% fee but all at 0% for 12 months. 

But would it make more sense, because of the 5% fee, to only get a MT for the £2062 (which would then be at standard APR), and the £3273 at 5.9%, as the 5% fee would be less than the standard and 5.9% interest over the year? And leave the £2816 that is at 3.9%?

Any advice gratefully received as my brain is about to melt from my ears, and I cannot find a calculator online that would easily help me figure this out.

Thanks in advance,

Yaz

MorningcoffeeIV

It depends how long it will take you pay off the balances. If you're paying it all off within a year for instance, the 5% fee will be much larger than the interest from the 5.9% rate.

angelyaz

MorningcoffeeIV said:

It depends how long it will take you pay off the balances. If you're paying it all off within a year for instance, the 5% fee will be much larger than the interest from the 5.9% rate.

Thanks, I thought that for the 3.9% rate, but now you’ve pointed it out my brain has kicked in and sees what you mean about the 5.9% rate. I’ll have to tighten my belt a bit more and try and get that 5.9% amount paid off in a year.

Altior

It's all quite marginal, but you have to be careful which balance is paid off first if not paying the lot off. To get the £2K paid off first you might well need to wait until it has reverted to standard rate. I wouldn't bother with the other ones personally with 5% fee. You'd just get the same problem again in 12 months, albeit with reduced liability. But you need to game plan how to clear them closer to the promo rate ending dates. 

enthusiasticsaver

I don't understand why you would would want to pay off the £2816 with a 5% fee when you are only paying 3.9% interest.  It is debatable whether it is worth paying off the other £3273 either because a flat 5% fee will be more than 5.9% on a presumably reducing balance.  

Altior

There isn't one on the maths, or the timescales really. I suppose some psychological/manageability benefit of having it all on 0%, and a clear target time to get it cleared down, or moved to another 0% option.  

Nasqueron

enthusiasticsaver said:

I don't understand why you would would want to pay off the £2816 with a 5% fee when you are only paying 3.9% interest.  It is debatable whether it is worth paying off the other £3273 either because a flat 5% fee will be more than 5.9% on a presumably reducing balance.  

I've done it with BT cards purely to milk more interest from savings - better to have say £100 of interest over a year and pay a £50 BT fee than pay off the original BT card (which again allowed interest that covered the BT). Also delaying repaying to allow time to get more money in say by doing another job, selling things, bank switches etc