Credit card balance transfer

Piperk

Hi all,

I have the option to transfer a £9,000 credit card balance from my Barclaycard and Tesco to an existing MBNA card I have - 0% for a year. Or I can apply to a virgin card - 0% for 29 months. Which is better for my credit rating? I won’t be able to pay off in a year so will prob move again. 

Thank you! 

CliveOfIndia

Purely in terms of your credit rating (however you define that), it won't make a bit of difference.  A lender is concerned only with your level of outstanding debt, not where it's sitting.  On the face of it you'd be better off going for the longer deal, but any difference in the fees each card charges might sway the decision.

Piperk said:

I won’t be able to pay off in a year so will prob move again.

Hopefully you'll be able to do another BT when the time comes, but it always a slightly dangerous gamble - there's no guarantee that you'll be able to shift the remaining balance elsewhere.  I know it's not always easy, but it's much better to plan to have the balance cleared by the time the promotional rate expires if at all possible.

Piperk

Ok, thank you. So rather than looking at the number of months would you be looking at the balance transfer fee. For example with virgin I think they range from 1.75 to 3% but the number of months differ. Better to go for the lower transfer fee and then just switch? Or, as you say try to clear within that time. 

CliveOfIndia

It's always a balancing act.  I think your starting point needs to be how long you will realistically be able to repay it - you say you won't be able to do it within 12 months?  If that's the case, go for the option that charges the lowest fee but which gives a sufficient timescale in which you will be able to repay it all.

Piperk said:

Better to go for the lower transfer fee and then just switch?

That's a decent approach, but as I mentioned previously, the danger is that you may find yourself with a balance remaining, and with no further BT offers available to you.  Even if you can get another BT card, it's likely that there'll be another fee to pay when you do the switch.

All other things being equal, your best bet is to just go for the lowest fee and do whatever it takes to repay it by the time the promotional rate expires - not always easy, I do appreciate, but it's the option that'll save you most money overall.