Should I pay off this 0% card or try and roll it over to a new one?

Malkytheheed

Hi. 

Last year I bought a £20k car. £10k cash (trade in) and £10k on a 0% credit card. 
I've been paying it off at £300 a month, which is a little over the minimum amount. 

My question is, the 0% offer expires in October and I will still owe about £5500 on it. Do I pay it off (I have the cash to do so but it's sitting in a high interest savings account). Or do I try and roll it into a new 0% balance transfer card? Ths would be something I have never done. 

Does balance transfer incur fees? if it does will it be less than the interest i'm gaining elsewhere? or would any fees wipe this out? If it's close to break even I'd probably be inclined to just pay it off to save the "faff" for a small gain. 

Any advise very welcome! Thanks. 

Brie

Do you have a card with at least the £5500 + headroom where a 0% offer is likely at the right time?  And with an unrelated bank??  That will be the crucial bit.  

Yes there are fees normally for any BT or money transfer.  MTs tend to be a bit higher on my cards.  So a BT might charge 5% and a MT 5.5%. The % charged will be on the total amount of the transfer.  So £5500 at 5% will mean there will be £5725 on the new card.  Often this needs to be under 95% of the credit limit (headroom)

Whether that is better than your current high interest amount will take a bit of calculating and guess work.  If you are getting 5% on an account and you have a 5% fee then it will only make sense to do a BT/MT if the 0% interest period is more than 12 months and you know that the interest on the account isn't likely to go down.

Malkytheheed

well i found a barclay card with 0 fees balance transfer. 
I calculated the interest I would get over the 14 months would be about £220. so probably worth doing. 
However I've been given a weird pre-acceptance chance for that card? Not sure why. My credit history is immpeccable. All the other cards are 100% pre-approval so not sure what is going on there. But on those the fee makes it probably not worth my time to be honest. 

Malkytheheed

There is this one? 

Altior

No reason not to do it, all other things being equal. I personally would lean to 2.99% for 33 months, as the 0% fees are pretty rare, and that's just over 1% a year. But I rarely get 0% fee offers. 

Nasqueron

Try an eligibility checker on the Barclays site, the comparison sites aren't always accurate

https://www.barclays.co.uk/credit-cards/check-your-eligibility/

Malkytheheed

Altior said:

No reason not to do it, all other things being equal. I personally would lean to 2.99% for 33 months, as the 0% fees are pretty rare, and that's just over 1% a year. But I rarely get 0% fee offers. 

That wouldn't make sense ofr me as I would end up paying more in fees that I would get from the cash interest. I would be better off just paying it off unless I can get a 0% BT card I think. 

Shadyocuk

Malkytheheed said:

Altior said:

No reason not to do it, all other things being equal. I personally would lean to 2.99% for 33 months, as the 0% fees are pretty rare, and that's just over 1% a year. But I rarely get 0% fee offers. 

That wouldn't make sense ofr me as I would end up paying more in fees that I would get from the cash interest. I would be better off just paying it off unless I can get a 0% BT card I think. 

I think you might have misunderstood how the fees work on a balance trf , for the quoted Virgin Money card if you transfered £5500 then the total fee would be £164.45 , as long as you made the minimium payments you would not be charged any interest for the 33 month term. You should be able to easily make more than that in interest using various high rate Regular savings accounts, of course if you can get the 13 months with no fees at all then you cant fail to profit and you might be able to trf that bal to another card at the end of the 13 months.

Just remember when calculating the amount of interest that you can make over the term , to make sure you use
the reducing balance and not just the initial balance, different lenders/cards have different % monthly minimium payments. You also need to consider if your total interest earned (not just on the stoozing pile) would take you over your tax free allowance and if any tax would be payable.

Just stick to the golden rules 
1) always having at least as much as the outstanding balance in easy access savings account/s
2) always make the minium payment (best to set up a direct debit for this)
3) Fully read and understand ALL the terms and conditions of the new card (in the majority of cases when you have a 0% interest promotional balance trf rate , you DO NOT use that card for any purchases)