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demonted Posts: 190 Forumite
30 June 2011 at 10:46PM edited 30 June 2011 at 10:50PM in Credit cards
I'm considering transferring my existing credit card balance to a 18/20 months (or whatever is available) 0% interest credit card.
So when I do, what would the minimum payment be during the interest free period?
The balance I wish to transfer is just short of £4000 and my current minimum payment is £85pm of which £53pm is interest at 17.9%.
My current minimum payment is 2.25% of my existing balance.
I assume that as the interest on the new card is 0% for 18/20months then the minimum payment will be without interest, thus £32pm ?
Can anyone confirmed this, based on their own experience?
I'm aware that with a 0% balance transfer deal, its best to pay as much as possible each month to reduce or clear the existing debt during the interest free period with no additional spending.
Fruit_and_Nut_Case Posts: 4,617 Forumite
30 June 2011 at 10:54PM
demonted wrote: »
I'm aware that with a 0% balance transfer deal, its best to pay as much as possible each month to reduce or clear the existing debt during the interest free period with no additional spending.
I beg to disagree. Stick as much as you can into a savings account and gain some interest. Pay all that to the CC just before the end of the 0% period.
Are you for real? - Glass Half Empty??
:coffee:demonted Posts: 190 Forumite
30 June 2011 at 11:20PM
Thanks for, hopefully the first of many replies, however, regardless of all the different opinions and methods of how to pay off existing debt, which is all very helpful, at the moment, I just need the confirmation regarding the minimum payment when transferring an existing balance to a new 0% Credit Card.
So, has any one transferred a balance to a 0% credit card to find that their minimum payment on the new 0% credit card is much less than what they were paying on their old credit card?
My understanding and theory may well be wrong.
CLAPTON Posts: 41,865 Forumite
30 June 2011 at 11:23PM
obviously not
the minimum payment will be whatever the T&Cs say it is
obviously these depends upon the card you get
if e.g. it was 2.25% the it would be 85 pm even though the interest is zero
demonted Posts: 190 Forumite
30 June 2011 at 11:48PM
Yes, that's my confusion.
My current card, the interest rate is 17.9% Apr.
The Minimum payment is 2.25% of the outstanding balance.
My minimum payment is currently £85pm.
Its stated on my statement that £53pm is interest and only £32pm is actually going towards paying the debt off.
Now, it is my assumption, that if the balance is transferred to a 0% credit card, during the 18/20 interest free period, there is no interest to pay? So, in my mind, the minimum payment would only be £36pm ?
Otherwise, if the minimum payment is 2.25% of the outstanding balance regardless of being a 0 rated card or not, then how is the interest calculated on my existing card ?
MoneyWasting_Expert Posts: 215 Forumite
30 June 2011 at 11:49PM
If its 0% then dont pay anymore than the minium payment, save it in a savings account as suggested or even have lying around in your current account looking good, but there really is no reason as to why the 0% lender should have your money sooner.
CLAPTON Posts: 41,865 Forumite
30 June 2011 at 11:53PM
Only the T&Cs can answer your question; have you read them?
the minimum payment is worked out on a formula which varies between cards and can be a bit complicated
the interest is worked out with a different formula
the two rules sometime interact and the minimum payment is always more than the interest (that wasn't always the case)
read the T&Cs about the minimum payment
demonted Posts: 190 Forumite
1 July 2011 at 12:52AM
I've read the T & C's of my existing card, which is not a 0% card, the answer is not there.
All that is stated, is that its 2.25% of the outstanding balance.As I do not have a 0% card credit, have no T & C's to refer to.
So, rather than give answers based on opinion, suggesting I read T & C can anyone who has transferred their balance to a 0% credit card give their answer based on experience ?
Prior to posting my question here, I've read all the leaflets with regard to 0% balance transfers, rates and fee's etc, I've extensively searched the internet and credit card website for the answer to no avail.
As for how and when I pay my credit card, that is not my question.
If I was a financially savvy I would not be on here asking questions or owing such an amount on a credit card.
At the moment, I'm not interested in saving accounts or taking longer to clear my debt.
Should I acquire a 0% credit card, it would by my intention to pay as much as I can to clear my existing debt within the interest free period. If unable to do so, I would hope transfer to another 0% credit card and pay off the remaining balance.
Yes, I am aware I must transfer the outstanding balance from one 0% card to another 0% card at least one month before the first card 0% introductory rate ends.
Look how complicated things can get when forum members answer questions which I have not asked. I'm actually thinking of the possible replies I will receive.
However, it would be good know, that should I transfer my existing debt to a 0% credit card there is a possibility my minimum payment will also reduce.
I have my reasons for hoping the minimum payment will reduced, which I don't believe is necessary to explain.
dippy Posts: 290 Forumite
1 July 2011 at 6:55AM
demonted,
As other posters have already said, the minimum payment varies from card to card, even for 0% deals.
The only way to find out the new minimum payment on a prospective new credit card is to look for it on their website, and failing that, to ring them and ask.
You can also ask people in the forum who may have the card that you're thinking about applying for.
I don't think there is any other way. You certainly cannot use your existing card's formula, that would be very dangerous.
Dippy
bouncydog1 Posts: 2,696 Forumite
1 July 2011 at 7:01AM
If you transfer a balance of £4k to a card where the minimum payment is 2% of the outstanding balance, then the 1st payment will be 2% of £4k plus any fees that were charged. So:-
BT £4k
Fees 3% £120
Balance £4,120
MP @ 2% £82.40Depends on the card and how they treat the BT fee. If the BT fee is subject to interest then the £82.40 will go towards the fee first leaving month 2 balance at £4,120 - £82.40 £4,037.60.
Month 2 card co may apply interest to the £37.60 remaining fee element etc.
Best bet first month is to pay enough to clear the fee if it attracts interest.
Subsequent months will be at % of outstanding balance.
You have to read the terms and conditions though - nobody can tell you what you will pay without having read them.
malcolmffc Posts: 339 Forumite
1 July 2011 at 7:03AM
Guys,
It looks like OP is in serious debt if he's only been making the minimum payment, so I don't think telling him to stooze for the sake of a few pounds in interest is appropriate.b It's unlikely he has the financial self-discipline for this.
OP - if I were you I'd chuck everything I could at the debt and have it no longer hanging over your head.
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