Balance Transfer to Current Account

virgo149

I've just been checking my Virgin Credit Card and they are offering a 0% balance transfer to a current account until January 2009 with a 3% fee.

Am I right in thinking I could 'borrow' at 0% and dump into a savings account (higher than 3% I guess) - then pay back by the expiry date of 0% offer.

Or is this something completely different?

If it's as above, anyone out there done this and any pitfalls to watch for??

NickX

Yes you are quite right.

This is a way of making money from Credit Card companies called stoozing and can be quite lucrative.

Have a look on the stoozing sub board for various people's experiences.

There is also an excellent site dedicated to stoozing called www.stoozing.com which provides loads of useful info and has its own dedicated forum.

virgo149

Thanks Nick - just can't quite believe they let you do it.

I'm off over to the other board now.............

MylesBetter

Remember to keep back the 3% transfer fee which will appear in full on your first statement. Also keep back in an instant access account the 9 monthly payments which will still be billed to you. This will earn interest for the months you have it to hand.

If you take this 3% fee as your savings you are investing, use this to work out your interest for a year. Should be about 65% return per annum after tax.

For 8 months think of investing in a cash ISA the first £3.600 then the rest in the Alliance and Leicester fixed rate bond for 6 months earning 6.83% AER. Close the bond after 6 months and for 2 months invest it in a high interest immediate access savings account ready to pay back to VIRGIN on time this will improve your credit rating and standing with VIRGIN.

YorkshireBoy

Have you done your sums?

£10K (I read your other post) in an ordinary 6% savings account for 8 months will net you the princely sum of £14.13 (£92.66 in an ISA paying the same rate)


http://www.stoozing.com/calc.htm

virgo149

Thanks Myles - this is starting to get confusing!

Sadly I've already used my ISA allowance for the year - put it in the Alliance & Leicester with a view to transferring after 12 months when the rate drops.

Can I pick your brains as my maths is pathetic??

Say I wanted to put £5K in the bond for 6 months then I would need to add the fee plus monthly payments on top? I'm not sure what the minimum payment for Virgin is as I rarely use the card and always pay it off (so never pay attention to min payment %). How do I work all this out? As a rough guide would it be approx:

Fee: £150 approx
Monthly payments (if at 2%): £100 x 9

So I'd need to transfer approx £9K (give or take).

Am I along the right lines or have I just lost the plot now completely?? :rotfl:

virgo149

YorkshireBoy wrote: »

Have you done your sums?

£10K (I read your other post) in an ordinary 6% savings account for 8 months will net you the princely sum of £14.13 (£92.66 in an ISA paying the same rate)


http://www.stoozing.com/calc.htm

The more I look at this, the more I think I'm going to leave it to you big boys to do! I'm not sure if £14 is worth all this trouble! :rolleyes:

YorkshireBoy

virgo149 wrote: »

I'm not sure if £14 is worth all this trouble! :rolleyes:

I agree, but then if they were to waive/cap the fee for you...that would be better wouldn't it?

You're never going to make money on a short duration/3% fee deal. The 3% fee for 8 months works out to (very) roughly 3% / 8 x 12 = 4.5% APR. So 4.5% AER net is what you're looking for just to break even...and that's before you factor in minimum payments (albeit only £5/25 on this card), delays at each end, and an early January statement date.

clio

Aye Y/B knows the sums well he makes you see the bigger picture and you have rightly said Virgo is £14 is worth all this trouble, "Nope i say"..