Meet the Other Phone. Child-safe in minutes.

Meet the Other Phone.
Child-safe in minutes.

Buy now

Please or to access all these features

Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Credit card balance transfers

6 replies

liltreasuretree · 02/08/2021 15:41

I just wondered if anyone could explain to me the rates for a credit card balance transfer.

I paid off a credit card a few months ago and still have one remaining with a balance of £2k. The company of the cc that I have paid off have offered me two different balance transfer offers.
First one being 0% p.a over 24 months with a handling fees of 4.5%.
The second offer is 3.9% p.a over 36 months with 0% handling fee.
Which of these would be the best offer with that kind of sum to transfer?

Many thanks is advance

OP posts:
ImNotShpanishImEgyptshun · 02/08/2021 15:47

If you take 0% pa and pay it off in 24 months, then you will pay 2090 in total.

If you pay £82 per month over 26 months, you'll pay £2086.
So if you pay £82 per month or more, you'll be better off with the second deal.

ImNotShpanishImEgyptshun · 02/08/2021 15:48

Have a look at uswitch.com/credit-cards/calculator

liltreasuretree · 02/08/2021 15:56

@ImNotShpanishImEgyptshun Thank you for explaining, that makes sense.
Would the p.a fee be charged in 12 months? So if I paid it off in 12 months there would be no fee? Or have I got that totally wrong?

OP posts:
ImNotShpanishImEgyptshun · 02/08/2021 16:22

Nope, you pay that handling fee when you take out the card and it's added to your balance immediately.

Pythonesque · 03/08/2021 08:13

The 3.9% pa would probably be charged monthly.

BarbaraofSeville · 03/08/2021 08:25

[quote liltreasuretree]@ImNotShpanishImEgyptshun Thank you for explaining, that makes sense.
Would the p.a fee be charged in 12 months? So if I paid it off in 12 months there would be no fee? Or have I got that totally wrong?
[/quote]
The first one looks like zero percent interest over 2 years plus a 4.5% fee.

So you transfer your balance, they add a £90 fee and you pay the card off. If you pay them £87 and pence every month for 2 years, the balance will be paid off in full in that time.

The second one looks like 3.9% interest per year for up to 3 years, but no added fee. They'll add interest each month, which will start off at a few quid, but reduce as you pay the balance off. Which is cheaper will depend on how quickly you can pay the balance off.

The second one will probably be cheaper as long as you can pay it off in 1-2 years (CBA to work it out, but however many months interest adds up to £90 - it won't be £90 in a year, because 3.9% is less than 4.5% plus you'll pay less interest as the balance reduces).

So if you're reasonably confident you can pay the whole balance off in about 18 months or less, I'd go for the second option and set up a standing order (or a direct debit if the card allows this) to pay off a fixed amount each month, rather than allowing the minimum payment to be taken, as this will mean you won't have paid much off by the time the offer ends.

You could always look on Monesaving Expert to see if they have any better card offers. You might get 0% with a smaller fee than 4.5%.

New posts on this thread. Refresh page