Do my sums add up?

gillbee

Another newbie to stoozing. Was thinking of going with the Virgin offer to stick in an ISA - but I'm in the process of switching banks and re-mortgaging so another credit file search is probably not a great idea.

Anyway - my new bank (first direct) offered me a balance transfer at 2.9% interest rate for six months. No balance transfer fees attached. I also get 6 bottles of wine thrown in :beer:

I'm thinking that £3000 would cost me £44 over the six months (give or take interest charges on interest I think ).

The rates are listed as :
Introductory Rate - 2.9% p.a for 6 months
Monthly Rate - 1.315%
Annual Rate Simple - 16.62%
Effective - 19.9%

I would be paying back £90 min repayment every month and at the end of the trial period would clear the balance completely.

Is there anything I might have missed that I should be accounting for?

Thanks

YorkshireBoy

This calculator says you'll make £35.

Assumptions:
6% ISA (realistic over 6 months with rates falling?)
5 month effective duration (allowing for transit delays)

Personally, I wouldn't take it. I'd wait to see if they're tempting you, and there's the possibility of a better offer later if you don't 'bite'.

I'm also a new FD customer and I have a 2.9% for 6 months offer on both purchases and BT's but my BT offer has a 2.5% fee attached. Are you sure yours doesn't?

gillbee

Thanks YorkshireBoy.

I checked with the operator and then read up on their web site.
http://www.firstdirect.com/creditcards/credit_card.shtml
If I transfer less than 500 then I have to pay 2.5% fee.

It's not a great return but it would allow me to get my full ISA allowance for the current year which will hopefully have long term tax gain.

jonathon_hart

gillbee wrote: »

It's not a great return but it would allow me to get my full ISA allowance for the current year which will hopefully have long term tax gain.

Given you have to pay the money back at the end of the 6 months not sure if that works

Bokkens

jonathon_hart wrote: »

Given you have to pay the money back at the end of the 6 months not sure if that works

You don't take the principle sum from the ISA you acquire another 0%
credit card to pay off the first leaving the funds in the ISA earning interest.
Multiply this practise and you will soon have enough to make you smile.

gillbee

I should have been a little clearer - I will have the £3000 to pay off outright by the end of the 6 months from sources other than the ISA I plan to get. I wont have this cash by April deadline - and I'll like to use my allowance.

If there is another decent balance transfer deal in 6 months then I'll look at keeping the £3000 in a decent interest account and switch to a new credit card otherwise I'll pay it off. Not a great earner but it does free up cash quick for my ISA allowance for 07/08.