Pros and cons of BT

Lillys_mum

I have at the moment 2 credit cards but I could transfer the balance from one onto the other at 0%.

Would there be any advantage to doing this.

The balance transfer fee would probably wipe out any interest savings - I was thinking more of the convenience of paying just one CC per month.

Also I was thinking if I did do the above and kept the other card I could use it for all the monthly food and petrol and then pay it off at the end of the month, leaving our salary in the bank account longer and gaining us a little interest rather than the banks.

Any thoughts would be appreciated.

Thanks
LM

Moggles_2

Which two credit cards are involved and how are they used at present?

Lillys_mum

Sky Card and Virgin.

Sky card are offering 0% bt and I have about 3500 outstanding on the virgin card at 6.9%

BT fee is 2.99% - I don't know how to work out the interest saved in comparison to the transfer fee but am assuming it would be less on the fee.

The cards are not being used at present and havent been for about 6 months we are just concentrating on paying off the debts so are looking for the best options to enable us to do it as quickly and easily as possible.
No desperation to pay them off other than the fact we owe money and would rather not - not struggling financially.

Thanks
LM

DestroyingAngel_2

It's a good idea to keep 2 cards, one just for a BT and the other for retail purchases. Do the BT on the card with the longest BT promotion period and the lowest promotion rate. Clear the balance on the other card completely, and then only use it for retail purchases. Keep the BT card ONLY for BTs and nothing else.

If you mix BT with purchases on ANY cc, you'll end up paying interest. This is because of "payment allocation". Basically, when you pay off any amount on your card, the bank would deduct that sum from the balance at the LOWEST INTEREST RATE first, before your payments start to eat into the higher interest rate balance. For example, if you had £1000 as a BT and £250 under retail purchases, you'd have to pay off the £1000 on the BT before your payments touch the retail balance of £250. So, if your APR on retail is 15.9%, you'd be paying interest at that rate until your BT is 0.

Check the terms & conditions of your card provider under "Payment Allocation", or "how your payment is allocated", some providers have extra terms. For example, how your payment is allocated could depend on which promotion ends first, or which started first, or which lasts the longest.

Any question, feel free to ask.