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Balance Transfer help!

(2 Posts)
Superbean09 Thu 03-Mar-16 15:31:55

I've got a Nationwide CC with £1,900 on it. Initially got it for once in a while purchases with the intent of paying it off in full every month. My ex partner persuaded me to use the card to put down a deposit and first months rent/fees on a flat and then decided to quit his job and not give me any of the money when we split.

Interest free period has now run out so am paying £45 per month and accruing about £20 odd in interest. Feels like I'm never going to pay it off!

I know I can balance transfer for a fee but I'm not sure what the best route will be considering I'm jobless at the moment, getting maternity allowance (full amount) and child benefit. I'm planning on going back to uni in September to complete a PGCE I started, but maternity allowance will cease in July so may have to temp (but with childcare costs not sure how feasible that will be!)

My dilemma is, will I be able to get a decent interest free balance transfer so I can concentrate on paying back more over the next few months until maternity allowance ceases and I'm struggling to pay off min payments on top of interest? If so where from?? I don't want to risk my credit rating by applying willy nilly but realise that time is of the essence with clock ticking on maternity. (This is my only debt by the way but have outgoings in the form of a phone contract and a Netflix subscription!)

sebasanders85 Sun 06-Mar-16 17:10:45

Normally I'd like to apply my mind to this kind of dilemma, but unfortunately someone has beat me to it and done a much better job.

Firstly in terms of your credit rating, there are a number of websites that will offer it to you for free. I personally use Noddle, but I believe CallCredit do it as well. (Side note: avoid the ads and do your own research rather that what they may offer you, they are still a business). This may be a good start to give you an idea of the kind of offers you may get from credit card companies.

In terms of what you may be offered, Moneysavingexpert has an "eligibility calculator" which should give an impression of how likely you are to be accepted for a particular card. (I think Moneysupermarket offer a similar service, but then they are the same company now anyway). This may give you least chance of unnecessarily damaging your credit rating.

On to my favourite bit (the maths). Based on the numbers you listed, it sounds like you are currently paying around 14% rate of interest. If you do a balance transfer you are likely to pay around 3% fee (possibly lower, but best to overestimate). That means on £1900, you will pay £57. Your minimum payment is usually around 2.5% of the outstanding balance (Approx the £45 you stated). You shouldn't drop this each month because it will take even longer to pay it off. If you pay £45 every month, then it will take about 3 months to make the balance transfer worthwhile.

The advantages (of the balance transfer) after:
12 months balance transfer: Approx £190 better off
18 months balance transfer: Approx £300 better off

The market leader is 40 months, but that will only be available for a select few I'm guessing.

You would need 44 months before the balance transfer would be paid off. You would need 59 months to pay off without the balance transfer.

I would say if you can afford it and you choose a balance transfer, divide your balance (after the fee is applied) by the number of months the balance transfer is for (If you can afford more than this calculation, do that instead).

This way you can be certain not to pay any interest on this again. This does also give you the flexibility to reduce this if necessary in harder months... BUT you would then pay interest at the end of the interest free period.

If you need anything more or anything explained further, I'm happy to help. :-)

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