SBT- 6k or 10k?

squirt

Hi all, 1st post so here goes.

After reading some of the excellent advice on MSE I recently applied and have been accepted for a Virgin 0% Credit Card with a 10k limit. :T

My plans were to SBT this to my Current A/c to pay off my existing £6k to Natwest Credit Card with the remainder being used to help clear the balance of a £5500 car loan with 1st National. My last statement from 1st National showed £4200 outstanding with 34 months left.

I currently pay £150 a month to both Natwest and 1st National. (£300 in total)

However when I asked for a settlement figure from 1st National the amount required is nearer £4700. :eek:

I still intend to pay off Natwest and apply for another 0% card in 8-9 months time, et al until thats cleared. However here is my quandry. There's no way I can find the extra £500 to clear 1st National and in any case at I don't think I would be better off time wise in respect of this loan (4700/150 = 32 months compared to 34 at current payment)

Should I put the remaining £4k into some kind of savings a/c or just SBT £6k to clear Natwest.

Your expert advise will be appreciated

squirt

delboypass

what does SBT mean?

Willsnarf1983

super balance transfer

Will

matrix999

The SBT at 0% is all well and good so long as you can discipline yourself not to spend on the SBT card and that you remember the dates when you have to re apply for other cards.

One thing to remember is that you may not get accepted for another card and the APR on the Virgin Card after the SBT time will certainly be more than the one for your car loan!!

All in all its a good way to save money so long as everything goes to plan.

YorkshireBoy

With a bit of planning, and a whole lot of discipline this could be a really easy one to solve. So, here goes...

PLAN A

Virgin will only let you (S)BT 95% of your limit so we're playing with £9.5K here - and you need (at the moment) £10.7K. So, before you activate the Virgin card you ring Virgin and ask for a limit increase to £11.3K because you want to do 2 BT's, one for £6K from NatWest and one for £4.7K from your "overdraft" with your current account provider. Be aware that your Virgin repayments are only £5 per month so you MUST put the £295 saving per month into a suitable savings account. After 9 months you will have around £2,400 saved including interest. Use this to partially pay off Virgin and BT the rest (£8.3K) to your new card which you must apply for some 6 weeks prior to the end of your Virgin intro period. If you ignore the minimum payments on your next card (£8.3K x 2% = £166) and continue to pay the £300 a month you have been used to paying, your debt will reduce by over £130/month.

PLAN B

Invoke this if you are unsuccessful in raising your credit limit for plan A. Ask to BT £6K from Natwest and £3.5K of your overdraft to your new Virgin card. Put the £3.5K into a savings account along with £145/month (your CC payment saving due to the £5 minimum Virgin payment). Continue to pay your car loan monthly payments. In just a few months, and with your £150 payments being continued for the car loan, your savings pot will equal the outstanding loan amount. Then settle your loan.

At the end of your Virgin 9 months deal you will transfer the remaining balance to a new card provider.

KEY ISSUES

1. You will see that both my plans involve 2 BT's. This is deliberate in that a £10.7K balance transfer from a current account could set alarm bells ringing with the card provider. Far better to split the debts and make 2 payments IMHO. Don't forget to get Virgin to confirm there are no BT fees.

2. Do not waste this opportunity to reduce your overall borrowings.

3. Do not "squander" the monthly payment savings due to Virgin's £5 policy.

4. Because your plan involves both BT's & SBT's, spend a while reading up on Martin's articles on this site, and also check out https://www.stoozing.com for some tips.

5. Don't make any purchases with your Virgin card, as your payments go towards your 0% debt first and any purchases drop straight on to a 15% rate. This is a BT card - use it for your 2-off BT's and then cut it up.

6. One final comment - I don't know how disciplined you are with money but, if you fail to make payments on time, you will be fined for late payments etc. A £20 fine is not going to "break the bank" with the scale of your situation. However, many CC providers withdraw 0% offers for rule breaking and this would be a disaster for you as your rate would jump to 15.9% with Virgin. So, whatever you do, set up a monthly minimum payment direct debit and keep an eye on the intro period exact end date.

Good luck

squirt

Yorkshireboy,

Many thanks for your excellent, as always reply. A couple of quick questions though before I make my final decision.

1. When I applied for the Virgin card I stated that I owed Natwest £6K and First National £4.2k. Won't they be alarmed that I now want to BT say, £3.5k to my "overdraft"?

2. Do Banks/Building societies etc. perform any kind of credit check when you open an a/c?

squirt

YorkshireBoy

squirt wrote:

1. When I applied for the Virgin card I stated that I owed Natwest £6K and First National £4.2k. Won't they be alarmed that I now want to BT say, £3.5k to my "overdraft"?

They didn't comply with your request, they just simply "scored" you with the computer. Allowing for their 95% rule, they still didn't give you enough to cover your BT's originally requested. You need to speak with a "Human" now to get the limit raised. I was initially offered £5K with Virgin but one phone call got it doubled to £10K - your "raise" is only just over £1K so I'm willing to bet it will be successful.

Tell them you made a mistake with the First National settlement figure. After all, thats the truth isn't it? I don't believe Virgin will pay a loan off directly, you have to do it through the SBT route. (Don't mention SBT when you ring them - they won't know what you mean!).

squirt wrote:

2. Do Banks/Building societies etc. perform any kind of credit check when you open an a/c?

I can't answer this one, but my gut feel is yes for current accounts. I "believe" even savings account providers carry out money-laundering checks. Maybe someone else can give a definitive answer?

Good luck with the plan.

Xbigman

Check your 1st national terms and conditions. I think they allow overpayments without penalties but add interest on if you get a settlement figure. If this is the case you pay them 95% of the balance one month and ask for a settlement figure the next month, saving a lot of interest.
Regards



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