Shifting Credit Card Balance

wmat983

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

grumpy_codger

30% APR = 6.78% per 3 months *

40% APR = 8.78% per 3 months **

8.78% - 6.78% = 2%

i.e. it makes no sense to pay 3% fee even for 3 months of lower rate, let alone for 2 months.

*  1.30^(3/12) - 1

** 1.40^(3/12) - 1

fatbelly

You should use your surplus income/savings to overpay the 40% apr card

Can you clear that one now?

MattMattMattUK

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders, not positively. They will not be building a good looking credit report if that is what you are aiming for.

grumpy_codger

MattMattMattUK said:

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders....

This is a too swiping statement. No CC lender wants their customers to pay their CCs in full. It's their business to lend money and to charge interest.

Nasqueron

grumpy_codger said:

MattMattMattUK said:

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders....

This is a too swiping statement. No CC lender wants their customers to pay their CCs in full. It's their business to lend money and to charge interest.

Lenders like making money, they dislike fines for irresponsible lending. The purpose of a credit builder card is to use it to build your record - buying and paying in full every month (the card issuer still gets merchant fees). A future lender say for a mortgage would see OP with a credit card and not being able to pay it off in full every month which as Matt says, looks bad on you. You don't make yourself attractive to lenders by paying interest every month even if the existing lender is making money from you.

grumpy_codger

Nasqueron said:

grumpy_codger said:

MattMattMattUK said:

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders....

This is a too swiping statement. No CC lender wants their customers to pay their CCs in full. It's their business to lend money and to charge interest.

Lenders like making money, they dislike fines for irresponsible lending. Lenders like making money, they dislike fines for irresponsible lending. The purpose of a credit builder card is to use it to build your record - buying and paying in full every month (the card issuer still gets merchant fees).

Responsible lending is when they offer you a credit limit (based on your circumstances) and remind you to pay more than minimum.

This purpose is for a CC holder, not for a company. They attract customers by giving them an opportunity to fulfil this purpose. If they want payments in full, why on earth do they offer BTs and MTs for N months? The answer is obvious - to charge interest. About half of CC holders in UK don't pay their balance in full. And if their income is high enough (vs. the total debt) and if they pay a little more than minimum required, all lenders are happy to have such customers. 

A CC is just a variety of a convenient flexible loan, and people hardly ever pay loans in full every month.

It's not that I advocate doing this. I pay my balances in full unless they are at 0%.

Nasqueron

grumpy_codger said:

Nasqueron said:

grumpy_codger said:

MattMattMattUK said:

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders....

This is a too swiping statement. No CC lender wants their customers to pay their CCs in full. It's their business to lend money and to charge interest.

Lenders like making money, they dislike fines for irresponsible lending. Lenders like making money, they dislike fines for irresponsible lending. The purpose of a credit builder card is to use it to build your record - buying and paying in full every month (the card issuer still gets merchant fees).

Responsible lending is when they offer you a credit limit (based on your circumstances) and remind you to pay more than minimum.

This purpose is for a CC holder, not for a company. They attract customers by giving them an opportunity to fulfil this purpose. If they want payments in full, why on earth do they offer BTs and MTs for N months? The answer is obvious - to charge interest. About half of CC holders in UK don't pay their balance in full. And if their income is high enough (vs. the total debt) and if they pay a little more than minimum required, all lenders are happy to have such customers. 

A CC is just a variety of a convenient flexible loan, and people hardly ever pay loans in full every month.

It's not that I advocate doing this. I pay my balances in full unless they are at 0%.

You are confusing several things things

For a start - 2 different types of card, 2 different uses:

Normal purchase CC credit builder - buy fuel and shopping every month, pay back in full, builds a solid credit record towards say a mortgage. Never pay interest, get S75 protection, CC gets a small amount of revenue from fees

BT/MT card - bank gets an initial fee, CC is marked as Promotional rate, not intended for credit building.

With CC in general 
The intent is your interpretation, assuming they do it and hope people pay loads of interest - perhaps, but they are encouraged to pay more than minimum, issuers even increase the minimum, they have to offer hardship help etc. 
UK CC holders not paying balance in full - perhaps by choice, living beyond their means (even if involuntarily) is obviously good for the issuers but that's not the point here about credit builders

grumpy_codger

Nasqueron said:

grumpy_codger said:

Nasqueron said:

grumpy_codger said:

MattMattMattUK said:

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders....

This is a too swiping statement. No CC lender wants their customers to pay their CCs in full. It's their business to lend money and to charge interest.

Lenders like making money, they dislike fines for irresponsible lending. Lenders like making money, they dislike fines for irresponsible lending. The purpose of a credit builder card is to use it to build your record - buying and paying in full every month (the card issuer still gets merchant fees).

Responsible lending is when they offer you a credit limit (based on your circumstances) and remind you to pay more than minimum.

This purpose is for a CC holder, not for a company. They attract customers by giving them an opportunity to fulfil this purpose. If they want payments in full, why on earth do they offer BTs and MTs for N months? The answer is obvious - to charge interest. About half of CC holders in UK don't pay their balance in full. And if their income is high enough (vs. the total debt) and if they pay a little more than minimum required, all lenders are happy to have such customers. 

A CC is just a variety of a convenient flexible loan, and people hardly ever pay loans in full every month.

It's not that I advocate doing this. I pay my balances in full unless they are at 0%.

You are confusing several things things

For a start - 2 different types of card, 2 different uses:

Normal purchase CC credit builder - buy fuel and shopping every month, pay back in full, builds a solid credit record towards say a mortgage. Never pay interest, get S75 protection, CC gets a small amount of revenue from fees

No, I'm not confusing anything. There are no "2 different types of card", the difference is vague and arbitrary. Other lenders cannot see in a credit report what "type" it is - and you build your credit history, not just "credit" with one lender. "Credit builder" cards are promoted to customers with no/poor history and come with lower limit and higher interest rate. There is no clear boundary between "low" and "high".

Is my Aqua CC normal or "credit builder"? The starting limit was £200-£300. Now it's thousands. When did it stop being 'builder' and start being 'normal'? The interest rate is still huge - more than 30%, but who cares? I like it because of 0.5% cashback, including abroad where they don't charge for currency conversion. This is a very rare combination.

BT/MT card - bank gets an initial fee, CC is marked as Promotional rate, not intended for credit building.

There is no such a thing like "BT/MT card". Most of CC providers offer BT/MT to existing customers, not only to new ones. And not necessarily at "Promotional rate". This thread is a good example - the OP was offered to transfer a balance to 30%. Do you call this "promotional rate"? 

My Aqua offers me MT for 3% at "var. p.a".

Halifax offer BT/MT with no fee and at 6.9% p.a.

Nasqueron

grumpy_codger said:

Nasqueron said:

grumpy_codger said:

Nasqueron said:

grumpy_codger said:

MattMattMattUK said:

welshmatt983 said:

I have a couple of credit builder credit cards. I intend to pay them off in full in around 2-3 months but for now should I do a money transfer to the card with lowest APR with any spare available balance. One is 30% other is 40%, there is a 3% money transfer fee though, is it still worth doing?

If you have credit cards and are not paying them in full every month that will perceived negatively by lenders....

This is a too swiping statement. No CC lender wants their customers to pay their CCs in full. It's their business to lend money and to charge interest.

Lenders like making money, they dislike fines for irresponsible lending. Lenders like making money, they dislike fines for irresponsible lending. The purpose of a credit builder card is to use it to build your record - buying and paying in full every month (the card issuer still gets merchant fees).

Responsible lending is when they offer you a credit limit (based on your circumstances) and remind you to pay more than minimum.

This purpose is for a CC holder, not for a company. They attract customers by giving them an opportunity to fulfil this purpose. If they want payments in full, why on earth do they offer BTs and MTs for N months? The answer is obvious - to charge interest. About half of CC holders in UK don't pay their balance in full. And if their income is high enough (vs. the total debt) and if they pay a little more than minimum required, all lenders are happy to have such customers. 

A CC is just a variety of a convenient flexible loan, and people hardly ever pay loans in full every month.

It's not that I advocate doing this. I pay my balances in full unless they are at 0%.

You are confusing several things things

For a start - 2 different types of card, 2 different uses:

Normal purchase CC credit builder - buy fuel and shopping every month, pay back in full, builds a solid credit record towards say a mortgage. Never pay interest, get S75 protection, CC gets a small amount of revenue from fees

No, I'm not confusing anything. There are no "2 different types of card", the difference is vague and arbitrary. Other lenders cannot see in a credit report what "type" it is - and you build your credit history, not just "credit" with one lender. "Credit builder" cards are promoted to customers with no/poor history and come with lower limit and higher interest rate. There is no clear boundary between "low" and "high".

Is my Aqua CC normal or "credit builder"? The starting limit was £200-£300. Now it's thousands. When did it stop being 'builder' and start being 'normal'? The interest rate is still huge - more than 30%, but who cares? I like it because of 0.5% cashback, including abroad where they don't charge for currency conversion. This is a very rare combination.

BT/MT card - bank gets an initial fee, CC is marked as Promotional rate, not intended for credit building.

There is no such a thing like "BT/MT card". Most of CC providers offer BT/MT to existing customers, not only to new ones. And not necessarily at "Promotional rate". This thread is a good example - the OP was offered to transfer a balance to 30%. Do you call this "promotional rate"? 

My Aqua offers me MT for 3% at "var. p.a".

Halifax offer BT/MT with no fee and at 6.9% p.a.

This is factually incorrect 

The difference is not arbitrary - balance transfer cards have a balance with a special promotional rate flag to differentiate the balance being at 0% - often with a P on the credit file. Lenders can see it.

A credit builder card is a low limit card usually with high APR yes - higher than average is a clear boundary

Aqua was issued with a low credit limit, it was a credit builder card. The limit increase shows it is no longer such.

Of course there is such thing as an MT/BT card, they are specialist cards with an offer of typically long time at 0% with a fixed or low fee all at 0% (or a free transfer with a fixed low APR for the life of the balance)

Your last paragraph stems from you misreading the comment, OP hasn't been offered an MT offer at 30%, they have a card with that rate that has a special offer of a 3% fee to do a MT - they haven't stated the offer, you just assumed it was the higher rate

grumpy_codger

Nasqueron said:

This is factually incorrect 

The difference is not arbitrary - balance transfer cards have a balance with a special promotional rate flag to differentiate the balance being at 0% - often with a P on the credit file. Lenders can see it.

What I said was about the alleged essential difference between cards, not balances. Your 'P' differentiates the balances.

A credit builder card is a low limit card usually with high APR yes - higher than average is a clear boundary. Aqua was issued with a low credit limit, it was a credit builder card. The limit increase shows it is no longer such.

So, does one have to know the 'average' to say what sort of card it is? And regardless, it doesn't matter how you call it. As I said my Aqua is about 30-40% on purchases and cash advances - i.e. combines highish limit with high interest rate.

Of course there is such thing as an MT/BT card, they are specialist cards with an offer of typically long time at 0% with a fixed or low fee all at 0% (or a free transfer with a fixed low APR for the life of the balance)

So, do you call 'specialist cards' the ones that offer 0% BTs? Only to new customers or existing as well? Again, it's just words. Any card can be 'specialist' now and stop being 'specialist' tomorrow. Promotional rates come and go. MSE's 'top pick BT cards' list is live, not static.

Your last paragraph stems from you misreading the comment, OP hasn't been offered an MT offer at 30%, they have a card with that rate that has a special offer of a 3% fee to do a MT - they haven't stated the offer, you just assumed it was the higher rate

OK, I could have misread it, but don't see how.The OP has two 'credit builder' cards, 30% and 40%.

Are you saying that there is another card  with 'spare available balance' that offers a MT for 3% fee to lower APR or even 0%? Or is it the 30% card that offers MT at 0%? I don't see anything like this in the OP.

My point was that a 'credit builder' card that apparently wants the balance to be paid in full every month gives/offers this opportunity - and I don't see anything about the interest rate for this transferred balance being 'promotional'.