HELP ME - Which is Cheaper...6.9 or 0

OMAR

I need to borrow £600.00 on my Barclaycard for a month and was wondering which is cheaper as I have been given Barclaycard Balance Transfer CHQs to use.

So will bank one tomorrow. Then Pay it off on 14th September 2005.

Option 1 -

0% for 3 months with 2% fee

Option 2 -

6.9% for life of balance with no fee.

jimclark1967

Option 1 = £12

Option 2 = under £5 (depends how long the cheque takes to process etc..)

As it's a relatively low amount for a short period of time you're better off going for the no fee option.

JC

Joe_Bloggs

Lets go through the arithmetic.
2% of 600 can be written as 600 x 0.0200 = 600 x 2/100 = £12.

The interest on £600 borrowed at 6.9% for forty days say.
If you borrowed it for a year it would be 600 x 0.069 = £41.4
However you are only borrowing it for 40 days so its £41.4 x 40/365 = £4.54

I'll leave it up to the original poster to decide which is best. The second calculation is probably an over simplification of how your credit card charges you interest especially as they do it daily and not yearly like my calculation.
J_B.

PS (What are you Studying ?)

OMAR

JimClark - How did you work it out?
Obviously 2% of £600 is £12 but how do I calculate the other option?

molar

I thought barclaycard charge a fee for balance transfers as well?

Margaret_Millne

I just got 6.9% life of balance with no fee from Barclaycard this morning. Trying to get on top of debt, so the more I can get on life of balance at the moment the better - whilst still taking advantage of the 0% deals as well of course.

Joe_Bloggs

Omar may be a mathematics student but mathematics is not about personal finance. It takes guts to ask how things work on a public forum. The bonus is that we all can learn from the answers and put the knowledge into practice.
The fsa has some educational bits and bobs. Find them and post the links here if they were of use.
J_B.(No spoons today).