I keep getting 0% balance transfer offers WITH a 2.99% fee?

TheKDs

So they are not 0% at all, right? What am I not understanding? So sorry to sound daft. I am new to stoozing.

Last year, I got a 0% purchases card (10K) whose 0% deal expires in January BUT I'm holding a mental note for myself for October or November to pay it off, just over 12 months. I've put the money into several regular and lump interest accounts. Did all our spending on it, including big ticket items that came up.

That all makes sense. But now I'm doing the same with new cards I've got (12K in total) and they *also* offer balance transfers. Every time I log in to Lloyds, it reminds me I've got this offer that will expire soon. But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

powerful_Rogue

TheKDs said:

So they are not 0% at all, right? What am I not understanding? So sorry to sound daft. I am new to stoozing.

Last year, I got a 0% purchases card (10K) whose 0% deal expires in January BUT I'm holding a mental note for myself for October or November to pay it off, just over 12 months. I've put the money into several regular and lump interest accounts. Did all our spending on it, including big ticket items that came up.

That all makes sense. But now I'm doing the same with new cards I've got (12K in total) and they *also* offer balance transfers. Every time I log in to Lloyds, it reminds me I've got this offer that will expire soon. But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

You'll pay 0% interest for 19 months, but will cost you 2.99% to transfer the balance to this card.

CliveOfIndia

TheKDs said:

what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

You won't pay 2.99% interest, that's just a one-off fee.  Once you've paid the fee, you pay no further interest for the 19 months (though remember you'll need to pay the minimum each month).

TheKDs said:

But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be

Assuming you have the £8K available to pay off the existing card, you need to work out how much interest you'll earn on that money from your savings account.  If you'll earn more than £269 over 19 months, then it's worth doing.  Of course you need to not touch the savings, as you'll need them to clear the card if you're unable to do another BT after 19 months.

But if you'll earn less than £269 interest, you're better off to just clear the card debt now, then gradually rebuild your savings.

TheKDs

CliveOfIndia said:

TheKDs said:

what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

You won't pay 2.99% interest, that's just a one-off fee.  Once you've paid the fee, you pay no further interest for the 19 months (though remember you'll need to pay the minimum each month).

TheKDs said:

But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be

Assuming you have the £8K available to pay off the existing card, you need to work out how much interest you'll earn on that money from your savings account.  If you'll earn more than £269 over 19 months, then it's worth doing.  Of course you need to not touch the savings, as you'll need them to clear the card if you're unable to do another BT after 19 months.

But if you'll earn less than £269 interest, you're better off to just clear the card debt now, then gradually rebuild your savings.

So if I put the whole 8K into savings, as a lump sum and assume 4% interest, I likely would be better off. I can see my credit score being affected by maxing out a credit card, so would that continue to happen?

TheKDs

That makes us around £250 better off. But it's a bit of a faff. I've already made around that or a wee bit more on simply saving the credit card amount monthly. @CliveOfIndia and @powerful_Rogue, thank you. I do understand the one-off vs interest difference now. 

powerful_Rogue

TheKDs said:

CliveOfIndia said:

TheKDs said:

what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

You won't pay 2.99% interest, that's just a one-off fee.  Once you've paid the fee, you pay no further interest for the 19 months (though remember you'll need to pay the minimum each month).

TheKDs said:

But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be

Assuming you have the £8K available to pay off the existing card, you need to work out how much interest you'll earn on that money from your savings account.  If you'll earn more than £269 over 19 months, then it's worth doing.  Of course you need to not touch the savings, as you'll need them to clear the card if you're unable to do another BT after 19 months.

But if you'll earn less than £269 interest, you're better off to just clear the card debt now, then gradually rebuild your savings.

So if I put the whole 8K into savings, as a lump sum and assume 4% interest, I likely would be better off. I can see my credit score being affected by maxing out a credit card, so would that continue to happen?

The credit score is meaningless and a made up number that is only ever seen by you and the credit reference agency.  It's the credit report history that companies look at.

CliveOfIndia

powerful_Rogue said:

TheKDs said:

CliveOfIndia said:

TheKDs said:

what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

You won't pay 2.99% interest, that's just a one-off fee.  Once you've paid the fee, you pay no further interest for the 19 months (though remember you'll need to pay the minimum each month).

TheKDs said:

But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be

Assuming you have the £8K available to pay off the existing card, you need to work out how much interest you'll earn on that money from your savings account.  If you'll earn more than £269 over 19 months, then it's worth doing.  Of course you need to not touch the savings, as you'll need them to clear the card if you're unable to do another BT after 19 months.

But if you'll earn less than £269 interest, you're better off to just clear the card debt now, then gradually rebuild your savings.

So if I put the whole 8K into savings, as a lump sum and assume 4% interest, I likely would be better off. I can see my credit score being affected by maxing out a credit card, so would that continue to happen?

The credit score is meaningless and a made up number that is only ever seen by you and the credit reference agency.  It's the credit report history that companies look at.

OP, this is correct - you can safely ignore your score.  It plays no part in lending decisions, and in fact is not even visible to lenders.

What you may need to consider is the fact that the amount of debt on the credit card will be factored into a lender's affordability calculations.  So whilst the score you see is totally meaningless, the debt will be a factor - if you're likely to be in a position of wanting to obtain further credit in the near future.

Savings, on the other hand, are never taken into consideration.  This may or may not be of relevance to you, but it's worth being aware of.

Nasqueron

TheKDs said:

CliveOfIndia said:

TheKDs said:

what would the point be if I am paying interesting on it at 2.99% anyway? It looks like I will pay £269 to transfer this so it's not truly 0%? 

You won't pay 2.99% interest, that's just a one-off fee.  Once you've paid the fee, you pay no further interest for the 19 months (though remember you'll need to pay the minimum each month).

TheKDs said:

But transferring my 8K balance into the new Lloyds and keeping the debt there for 19 months - what would the point be

Assuming you have the £8K available to pay off the existing card, you need to work out how much interest you'll earn on that money from your savings account.  If you'll earn more than £269 over 19 months, then it's worth doing.  Of course you need to not touch the savings, as you'll need them to clear the card if you're unable to do another BT after 19 months.

But if you'll earn less than £269 interest, you're better off to just clear the card debt now, then gradually rebuild your savings.

So if I put the whole 8K into savings, as a lump sum and assume 4% interest, I likely would be better off. I can see my credit score being affected by maxing out a credit card, so would that continue to happen?

8k could go into 2x santander edge accounts and edge saver (don't activate the fee by not putting DDs on the account) - 6% and paid monthly