I played around with the snowball sheets this weekend, working out different scenarios for the next (last) 12 months of debt repayment, to see if I could save any interest.
I applied for, and got accepted for this credit card from Virgin, which gives you 0% on balance transfers for 16 months with a 2.98% fee. With this card you are allowed to transfer the money to your checking account, which I need to do as it's a loan balance that I want to pay off, hence why it's a super balance transfer.
The trouble is, now that I've gone and got accepted, with a balance limit of £8,800, I'm wondering if it's worth it?
I don't use credit cards for buying stuff any more, but I'm confident that I will never ever abuse them again, so I know I can use this one just for the purpose of interest saving.
Scenario 1:
Leave the balances where they are and make a monthly payment of £1,080
Loan 1
Balance outstanding: £2,456
Interest Rate: 7.66%
Minimum Payment: £297
Loan 2
Balance outstanding: £9,807
Interest Rate: 9.9%
Minimum Payment: £194
Interest to pay: £531
Scenario 2:
Balance Transfer £8,500 of Loan 2 balance to a 0% credit card with a 2.98% transfer fee (£254)
Interest to pay: £59 + £254 = £313
Scenario 2 will be an interest saving of £218 over the next 12 months. What would you do?
Get free updates from No More Spending to your email or reader.
I am not an expert, but I have done what you are considering doing and I did not abuse the opportunity.
ReplyDeleteMany years ago I would make one large purchase like a computer. Then we would get these sort of offers. I always did them with no problems. They seemed to help me in getting my debts gone faster.
If you are confident you will not abuse the situation then I say go for it! Save the intrest money! Every little bits helps.
Hi there-I say go for it too! Its a nice enough saving and to make you feel better, cut the card up once you've done the transfer. Good luck with making your decision!
ReplyDeleteI would probably do it, but of course I've done something similar before. I saved about $500 by transferring to a 0% card and then making just the minimum payments. I budgeted to payoff the card in a year and put the difference between that and the min payment in a savings account to earn a little interest. At the end of the year I emptied the savings account to payoff the rest of the card.
ReplyDeleteWith your self control, go for the less interest! The figures make sense!
ReplyDeleteI'd save the interest, you have proven to yourself that you are structured and in control of your debts - go for it!
ReplyDeletethank you for all your comments, I'm going to do it. I will be cutting the card up immediatley :)
ReplyDeleteGenerally speaking I'm not a fan of consoladation loans as they just opend the door to further debt but in your case you've gotten several years of displine behind you which would make that point moot.
ReplyDeleteRob (too lazy to log in) Madrid