Help with credit card and balance transfer

[DebtConfusion]

Due to recent personal issues maxed out credit card and it has a high interest rate and I couldn't (as I normally would) pay it off in full.

Money a bit up in the air at the moment

Applied for and got a 0% interest balance transfer card which I have 90 days to transfer the balance. But the credit limit on the new card is lower than the high interest card

Frankly I'll take whatever help I can get!

But I would like advice on how to juggle it all to do it the best way?

Approx figs

Outstanding balance on 35% interest card £1800

Limit on balance transfer £1500

I get 0% interest on the balance I transfer for 32 months from the date of the transfer which has to be made within 90 days of the account opening

What is the date of the account opening classed as when I applied? When I "fire up" the card or what?

I also get 0% interest on purchases for 3 months after account opening

I've never done anything like this before so I really need help understanding it please?

I find interest rates and banking terms really confusing

Normally I just use the credit card for larger purchases and travel for the protections and pay it off each month in full and feel in a terrible mess now!

I'm trying to work out a budget to get this debt paid off but can't work it all out and don't know what I am supposed to be doing regarding enacting the balance transfer and want to do it so that I time it as best as possible and get repayments as low as possible.

Transfer 1500 to you new card ASAP. Then pay off your 300 remaining high interest card as fast as you can.

Can you get another credit card on 0pc as well that you can use for for remaining 300?

Thanks for quick reply

That's what I was thinking but as I'm not the most well informed on this kind of thing I wasn't sure if I was better off waiting and transferring the balance at a later stage

Should be able to get the £300 paid off in next month or two

I also always seem to think about this stuff this time of night when there is nobody available to speak to at the relevant companies and I get stressed.

Not sure if I can get another card or increase the credit limit on the current 0% card is it cheeky to ask them? Is that allowed?

What @Morechocmorechoc said. Don't try and apply for another card, the fact you've just got a new one won't go in your favour for getting another. The 90 starts from when you activate the card but I'd do it now for peace of mind. Don't be tempted with the 0% interest free on purchases as your balance transfer will take you up to your limit anyway.

Thanks

That makes sense

What happens with the "old" high interest card when I do the balance transfer? Does the credit limit stay the same or go down or what?

@DebtConfusion the limit on the old card will remain the same but the balance will be £0 if you transfer it to the new card. It might be a good idea to close the card or reduce the limit though so that you don’t end up in the same position again.

Next payment date on the high interest card is 2nd June so I was wondering if I am best waiting until say 30th may to do the balance transfer? Or does it not really make much difference being only a few weeks?

I won't end up in same position again as it was due to particular circumstances that won't arise again. But I appreciate the point being made. I'd still like to have the option of a credit card to spend on in case there are purchases I want protection on and until I get the balance down on the new card that would have to be on the old one?

Hi OP, I work for a credit card company. I think you've probably sorted this by now but in case anyone else is reading, if you're paying off a card with a 0% card or a lower interest rate card, get it paid ASAP. don't wait until close to the payment due date as if the new company takes a few days to process it, you might miss a payment with the old company which obviously you don't want.

If you have this scenario, where you can only pay say 80% off with the lower interest card, do that. Set the payment date on the new card as whatever date suits you (payday or a couple of days after) rather than leaving as the date they've auto set which is likely to be a random date that might not be convenient for you. Too many payments get missed when a due date is different to the date a customer expects it to be and that causes late fees, marks on credit files and you sometimes lose the promotional interest rate you got too.

With the new 0% or lower interest card, pay just the minimum payment for the first couple of months and throw as much money as you can at the remaining balance on the old higher interest card until its gone. Once it's gone, if you're going to be tempted to use it and that will cause you issues, either cancel the account fully or if you want to keep as an emergency, ring them and ask for a temporary hold on the account. Most companies can do this and it just means the card can't be used until you ring them again (so if you want new shoes you have to think to yourself hmm is this worth ringing them for, if your cooker breaks you don't need to think cos it obviously is. The company will never refuse to take the block off, it's just to help you, but it does really help)

Any other questions feel free to ask me

Are you paying minimum payment on the card at the moment? The sooner you transfer the balance, the more interest you’ll save. Also, depending on when you transfer the balance and when the due date falls, you may find that you have more than 28 days before the payment is due. As an example, says you transfer the balance on 10 May, your statement date is 28 May and the due date is 14 June. You may find you can make an ‘extra’ payment towards your previous card to reduce the balance quicker. As soon as the transfer completes, your priority should be the balance which is accruing interest at 35%.

Cross post but basically what @Insidelaurashead said 😊

Realised I misread the post dates, no you haven't sorted yet but the advice is still the same 😀

Old credit card company won't drop your credit limit. The one I work for has quite high interest and our customers when they qualify for a better rate elsewhere do the balance transfer to pay us, all good. Some then choose to close our account, which is fine. Some choose to keep it as a 'I know I can access £1500 now in a dire emergency' which is also fine. I always say to people that in an ideal world we'd have a chunk of savings for emergencies so wouldn't need that high interest card, but I know we are not IN an ideal world, and for me personally knowing I can access funds quickly if the boiler goes or a wheel falls off my car helps me sleep at night

Also what @fairydustandsparkle said about extra payments, absolutely. No credit card in the world has a 'you can only make one payment per month' rule. Some customers pay an amount every week because they get paid weekly and that's easier for them to budget. I've even seen customers pay multiple random amounts on a daily basis. Granted that can look a little confusing on a statement but if that works for you then no problem on our side. I suggest to people that if you have £3.74 left in your bank account tonight and you get paid tomorrow, pay if off your credit card now. I appreciate £3.74 or whatever small amount sounds like nothing but they add up over time

Another thought, using the old card for purchases you want the section 75 protection on, good idea. If you then pay the balance in full when you get the statement (so buy a £100 item on the card, pay the full £100 balance off) you won't be paying purchase interest so your £100 item has cost you the same £100 it would if you'd paid cash, you're just using the card to benefit you. That's perfectly allowed and encouraged.

No one teaches us this stuff. I've never used the algebra I learnt at school (I'm sure some people have!) but I could've done with some lessons on this stuff for sure

As PP said. I'd transfer as much as possible to the 0% card asap then it's done, don't forget to include the balance transfer fee if there is one, usually around 3%. So you could tfr £1455 of the old balance. (97%)

Once the first statement arrived I'd set up a standing order to pay off £46pm (1455 divided by 32 months) to arrive 5 days before the due date, then forget about it until month 31 (diarise it, email reminders etc) ,then cancel the S/O and pay off the final balance.

I'd try to pay the high interest card asap and then cancel it

With every credit card I've had I always ask them to change to statement due date to about a week after my payday, just in case there is an issue with payroll.

So I get paid on the 20th and all my bill D/Ds and c/c payments go out on the 28th.

My accounts are completely streamlined and from the 1st I know how much spending money I have until I get paid again

The 32 months will start from the date you opened your account not from the date you do the date you do the balance transfer.

Do the balance transfer asap. You will only be able to transfer 90 or 95% of the £1500.

Don't use the balance transfer card for purchases. Read money saving expert for more info re this.

Remember to set up a direct debit to pay the minimum amount each month. If you miss a payment you could lose your interest free period.

I'm paying min payments on old card at the moment

I never use direct debits for this as they always mess it up! And then you end up with late fees. I do it myself a few days before it's due as that seems to work best - also because I know when there's a bank holiday or something that could mess things up. The direct debit system doesn't seem to be set up to handle that

I think I've done the balance transfer but it's not showing on the account yet and there was no confirmation on screen or anything which is a little unsettling - I'll check it tomorrow and if still not worked I'll call the new credit card people

I'll do as advised re clearing the higher interest date first, min payments on the 0% interest at first and then work on reducing the debt there asap too.

No one teaches us this stuff.

Don't get me started!

I never use trig or algebra but if I had been taught about banking and credit cards that would have been MUCH more useful!

By looking at the account I don't think the balance transfer has processed correctly - entirely possible I've made a mistake somewhere along the line

Possibly with the amount I tried to transfer.

I'll leave it for now rather than possibly confusing things by trying again! Will call and speak to the new company tomorrow

Many thanks for all the advice - I'm normally more organised with money than this but situation was beyond my control.

Actually we do try to teach this now in school. We have banks come in and provide sessions, information and resources, unsurprisingly teenagers have little to no interest in this sort of stuff as it isn't relevant to them at that age. Schools aren't there to teach you every little thing you need in life, a little common sense and ownership of your own issues goes a long way!

Amazing that this stuff is now taught in schools, that's great to hear.

OP with a balance transfer at my place you put it through usually on the app, then one of the team processes it and you see it within a couple of days. So don't panic but just call them when they're open today if you want to put your mind at rest

Not been back for ages quite honestly as @pweast post made me feel stupid and insulted

Common sense doesn't mean you can learn this stuff and it's even incredibly hard to find simple explanations online, this is why I had to ask here. I wasn't taught at school I barely learned how to do percentages and my parents also didn't know about this stuff they believed credit was an evil thing and would only buy things once they saved up

I'm going to risk looking stupid/irresponsible again (at least according to @pweast)

I've now got the first statement for the new credit card inc the minimum payment due.

I'm not sure whether to pay the minimum (things are a bit tight at the moment and I'm awaiting info on various income factors which should be resolved in the next month or two in terms of I will then know how much I definitely have coming in) but the minimum over time would mean the balance is not cleared before the 0% interest period ends.

Or whether I should pay a bit more which would mean spread over the 0% interest period I would pay off the balance in time

I will likely be in a position to pay off more next month if I pay the Min this time.

And I'm confident I can pay the balance off before the term ends.

The best thing to do is work out how many months there are before the 0% deal ends, then divide the amount owed by the number of months and set your payment at that level. Then you know you will clear it in time but you’re still paying a reasonable monthly amount.

That makes sense and is more or less what I was thinking I should do thank you