Balance Transfer query / Egg Anniversary

Kev64

Hi,

February is my 'Egg Anniversary' month and they've offered me 0% until 1/7/08 (2.5% fee). I've read the whole Egg Anniversary article, and I'm trying to work out how I can shift my existing Egg debt of £2,500 somewhere else, in order to clear the balance first before transferring a load from other cards back onto Egg to get the 0% until July.

The problem is that the only cards I have that have room on them to take the £2,500 are a M&S card that's got £3,000 on it at 3.5% for life, and a Capital One card that has nothing on it - but they, unbelieveably, charge 24% APR for BT's AND want a 3% fee !

If I transfer the Egg £2,500 onto the M&S card, then straight back to the Egg card, will that mess up my interest on the M&S card ? (i.e. will M&S do this:

before:- <£3,000 @ 3.5%> <0>
Transfer from Egg: <£2,500 @ std rate 18.9%> <£3,000 @ 3.5%> <0>
Transfer Back to Egg: <£2,500 @ std rate 18.9%> <£500 @3.5%> <0>

i.e. - will they take the £2,500 payment from Egg and apply it to the 3.5% debt first, thereby effectively forcing my interest up to the standard rate for £2,500 of the £3,000 debt, leaving only £500 at the original 3.5% rate ?

I can't transfer it onto the Capital One card, as they will want a £75 fee for the privilege of lending me £2,500 for one day. The only other card I have is a Lloyds, but that's on 0% until May and it hasn't got room anyway, and my overdraft hasn't got room to take £2,500.

Is my thinking flawed in this ? I'm getting very confused with it all to be honest.

johnmoney05

I believe you can BT to your current account, even there is no overdraft there. I recall I did it once. (I have to check my papers back)

Sorry, forget it. Mis read OP post.

benf90

johnmoney05 wrote: »

I believe you can BT to your current account, even there is no overdraft there. I recall I did it once. (I have to check my papers back)

That wouldn't help though.

What the OP wants to do is transfer the money awat from Egg (to clear their Egg Card balance), and then transfer it back onto the Egg Card at the 0% rate.

To the OP, if you transfer the Egg balance over to M&S and back to Egg then M&S will apply the credit from Egg to the lowest rate of interest first. So you'll probably be worse off.

T&Cs of the M&S card with explanation of the allocation of payments can be found here, in the 'Other Financial Information' section:

http://www6.marksandspencer.com/pdf/CCTC.pdf

You mention a balance on a Lloyds TSB card at 0% until May. Are you going to try and transfer this when the deal runs out? Ie, are you going to apply for a new card?

If so, it may be worth closing the Capital One card as it has a high rate of interest. This'll reduce your available credit and so may help with any application you do in a couple of months time.

If you are looking to transfer the LTSB balance, then it could be an option to just leave the Egg balance as it is now and then transfer them both over in a couple of months.

May also be worth heading over to the debt free wannabe forum to read through the tips over there on how get your debt down. Don't take that the wrong way as I'm not implying anything, just thought I'd add it in case it turns out to be useful.

Kev64

Thanks Benf. I'm just trying to juggle it all so I pay the least interest.
My current state of affairs is:



My Lloyds 0% offer expires in May, so I need to clear that card completely before then as their standard rate, for me, is an astronomical 30% !!
I was hoping to move the £2,569 off the Egg card to zero the balance, then put the whole £8,260 from Lloyds onto the Egg card plus whatever else was best to transfer at the time. I'll have to get a move on with this as even though my Lloyds offer expires in May, I only have until the end of this month to take advantage of the 0% Egg offer. I know that's only until July, but every little helps.

The trouble I'm having is working out what is best to do... I know in principle that I should move as much debt as possible onto the lowest interest lender, but once all these transfer fees start coming into play, I get easily confused as to what the best thing to do is. I end up spending hours staring at the figures and going round in circles.

Looking at the balance sheet above, does anyone have any suggestions as to what's best to do ? If someone could give me some help with the maths of calculating whether a transfer is worth it, when you consider the interest rates & fees (and interest on the fees etc), I would be very grateful. Well, not so much the maths, but the logic of how to approach it !

benf90

I don't know the exact maths to work out specific amounts of interest that would accrue etc. Maybe someone else can help you out with that.

To me there seemed to be 2 options.

1. Transfer over the LTSB card balance to your Egg Card this month so that the LTSB balance effectively gets an extra 2 months at 0%.

2. Leave things as they are and then transfer over the LTSB balance as it nears the end of the 0% rate.

As the BT fee with Egg isn't capped from my rough calculations it wouldn't be worth transfering over the LTSB balance now just for the extra 2 months interest free. The BT fee would cost more than the interest you'd save (if you were to transfer it to Egg at Eggs standard rate before the 0% ended with LTSB).

Hopefully someone else will check that out though because I could be wrong, I wouldn't like to say I'm definately right.

Maybe this article about shuffling credit card balances will help...

http://www.moneysavingexpert.com/cards/cut-credit-card-interest

I haven't read it all myself but it looks like it could be of some help.

With the M&S card... are you going to put anything else on that card or is the balance just going to remain the same until its paid off? It's just that you have £3500 unused 'available' credit there, so you could reduce that credit limit if you wanted to.

The only reason I mention that is you're using up less than half of your available credit.

Egg do give special offer rates for balance transfers every so often. The offers change from month to month and different customers receive them etc, so you could get a different offer in the future.

If the worst came to the worst... you didn't get another offer from Egg, your 0% rate with LTSB ended and you couldn't get another card then there's always the option of transfering the LTSB balance to Egg at the standard rate (17.9%) as they don't charge any fee if its not a special offer. You'd be paying interest but it would be on the lowest rate available to you.

Sorry I can't be of anymore help. Hopefully that article above will help you out or someone else will post a suggestion.