Take renewed BT from Virgin @2.9%, or await next 0% offer ?

thefirs

I've just paid back a £12,500 BT from Virgin, the usual 9 months @ 0%. A letter came in today's post inviting me to take out another BT and increasing the credit limit. I called CS and asked their rate - 2.9%, £35 fee.

At the moment, that money will net 4% after tax (subject to downwards pressure over the coming months, surely?) in a savings account, so yielding a difference of up to £143 minus £35 = £108 benefit over nine months. This seems a bit marginal on such a large sum, and I told CS I would think about it. The lady said that the offers did not remain open indefinately, and that I would have to renegotiate the rate if I called again.

Whilst it seems churlish to not accept this donation, I wonder if (a) I could negotiate a lower rate (how does 2.9% compare with offers to others?), or (b) the substantial renewed balance would mitigate against being accepted for a usefully sized 0% BT as announced by ..who knows who.. next month. I see that Abbey and A+L are offering their brand of MBNA card for 0% nine months at present, so shall I cancel my Virgin card and apply for theirs? I'm a longstanding A+L accountholder, will this count for anything in favour of a larger limit?

fatboyonadiet

2.9% seems good, could you not ask them to waive the fee? maybe ring back up and say that you will take it but only if they don't charge

jaxxy00

One thing you could try is to extend the 9 months to say 12 months. That way you could earn a bit more on it and make it worthwhile.
I know they are negotiable as they offered me a BT rate of 0.3233% (quoted the monthly figure as cant remember the yearly figure) for 6 months with a fee of 2%, max £35. I told them i would think about it and ring them back and they said i would have to renegotiate if i did so.
Anyway when i rang back (later that day or the next) i said i was interested in the offer quoted to me but could they better it by doing it for 9 months instead of 6 then i would accept. She went away for a mintue or so and then came back and said yes so i took it.

Clariman

Hi thefirs

I've got to say that it goes against the grain having to pay anything at all on a stoozing credit card. It doesn't seem quite so 'clean' if you know what I mean. Having said that, let's look at it from a more hard-nosed point of view. You don't say what the new credit limit is, nor whether you have taken tax on your stooz pot interest into account.

If you are a higher rate tax payer, then 2.9% would not be worth it because you would only make approx 0.1% over a whole year (assuming your stooz pot earns a typical 5% per annum and you are taxed at 40%) even before you take off the BT fee.

If you are a lower rate tax payer, then you will make 1.1% over the whole year before the BT fee, which is not a huge amount.(i.e. 80% of 5% is 4%. 4%-2.9%=1.1%) .

If we assume that your new credit limit is £15,000 and we assume you are a lower rate tax payer and that your stooz pot earns 5% per annum, then you would earn £88.85 over 9 months. Is this worth it ? Well, if you could find a new card with a 9 month 0% deal with no BT fee, then £15,000 stoozed would earn you £450 after tax.

From purely a stoozing point of view, I'd be looking for another card.

Clariman

thefirs

Thank you all for all your collected observations. They confirm my unease with this ostensibly attractive offer, and I shall pass it over until something properly advantageous appears on the horizon.