Credit card 0% balance transfers?

[The Gauge]

I've never done it, how does it work?

I have two credit cards, let's say they were both offering 0% on balance transfers and I wanted to buy something costing £10k, If I paid half (£5k) on each card could I then transfer the £5k balance of each card onto the other card?

Are there hoops to jump through? Does it need authorising first?

[Thats What She Said]

As long as the credit limit is there, it's all very easy. No hoops to jump though or approval (again credit limit already being there). Just bear in mind most charge a fee on the balance transfer.

[Chris Type R]

Referred to as 'Stoozing' - you can find the deals collated on MSE - https://www.moneysavingexpert.com/credit-cards/bes...

Normally you cannot balanced transfer between cards within the same company.

[rossub]

Nah that’s not stoozing.

Stoozing is borrowing money not to buy something, but to then place it somewhere at a higher rate of interest than you’re paying to borrow it.

[The Gauge]

The reason I ask is I may be purchasing something at a price that is above the limit of either of my credit cards, but both cards used together would allow the purchase. Instead of paying the bill in full a month later, if both cards were offering interest free transfers I'd prefer to transfer the balances across to each other.

Weird really, as I'd be moving a £5k balance off one card, but then adding that same amount back onto that same card from the other one, and vice versa.

[InitialDave]

The Gauge said:

The reason I ask is I may be purchasing something at a price that is above the limit of either of my credit cards, but both cards used together would allow the purchase. Instead of paying the bill in full a month later, if both cards were offering interest free transfers I'd prefer to transfer the balances across to each other.

Weird really, as I'd be moving a £5k balance off one card, but then adding that same amount back onto that same card from the other one, and vice versa.

I think the main gotcha could be, if the purchase price is above the limit of either, and you put 50% of the purchase on each, you can't transfer the whole amount off one card to the other, as that would exceed the limit of the card you're transferring to?

What you could do is transfer it in stages.
Say it's £10k, and you have a £7k limit on both cards.
£5k is paid with each card, so both have an outstanding balance of £5k.
Then you do a £1k balance transfer both ways at the same time, so then each card has £4k purchase balance and £1k transfer balance, plus the additional balance from fees, but at no point are you over your limit on either card if there's a hiccup.
Then repeat until you're at £5k transfer balance plus fees on each.

The only other gotcha I can see is if they say that payments to your account pay off the promotional transfer balance first, you'd kind of snooker yourself?

[simon_harris]

Can you not find a credit card with 0% on purchases? That way you avoid the 3-5% balance transfer fees

[The Gauge]

InitialDave said:

I think the main gotcha could be, if the purchase price is above the limit of either, and you put 50% of the purchase on each, you can't transfer the whole amount off one card to the other, as that would exceed the limit of the card you're transferring to?

You make a good point, I'd not considered that.

simon_harris said:

Can you not find a credit card with 0% on purchases? That way you avoid the 3-5% balance transfer fees

I may well have to go that route. I guess any 0% purchase offer would normally just be for new customers, so I would perhaps have to take out a new card.

Edited by The Gauge on Friday 2nd February 22:57

[ferret50]

Apply for a new credit card with a £10k limit and interest free balance transfer, and preferably no transfer fee.

Transfer both £5k spends to new card, pay minimum payment for the interest free period. At the end of the free interest, apply for another card and transfer the remaining balance, rinse and repeat until totally paid off.

[The Gauge]

ferret50 said:

Apply for a new credit card with a £10k limit and interest free balance transfer, and preferably no transfer fee.

Transfer both £5k spends to new card, pay minimum payment for the interest free period. At the end of the free interest, apply for another card and transfer the remaining balance, rinse and repeat until totally paid off.

Good idea, thanks.

[Kingdom35]

ferret50 said:

Apply for a new credit card with a £10k limit and interest free balance transfer, and preferably no transfer fee.

Transfer both £5k spends to new card, pay minimum payment for the interest free period. At the end of the free interest, apply for another card and transfer the remaining balance, rinse and repeat until totally paid off.

This. Done this for years…..shh.

[rossub]

How do you ask for a limit though?

Any time I’ve applied, the limit given depends on your circumstances - there’s nowhere to request a specific limit.

[Roger Irrelevant]

rossub said:

How do you ask for a limit though?

Any time I’ve applied, the limit given depends on your circumstances - there’s nowhere to request a specific limit.

Yeah, IIRC when you take a card out you basically get what you're given as regards credit limit, and while there is often a facility to request that your initial limit be amended (either up or down), I can't imagine any lender is going to be too keen to increase straight after you've taken the card out. Still, the OP may as well see if he can get a 0% purchase card as even if it's not for the full £10k it would still partially solve the problem.

[ferret50]

Roger Irrelevant said:

rossub said:

How do you ask for a limit though?

Any time I’ve applied, the limit given depends on your circumstances - there’s nowhere to request a specific limit.

Yeah, IIRC when you take a card out you basically get what you're given as regards credit limit, and while there is often a facility to request that your initial limit be amended (either up or down), I can't imagine any lender is going to be too keen to increase straight after you've taken the card out. Still, the OP may as well see if he can get a 0% purchase card as even if it's not for the full £10k it would still partially solve the problem.

Use this site to find the offers....


[e-mail]

I've just had a quick look, £6k is their max, so the OP would need two balance transfer cards to cover his £10k requirement.

[AndyAudi]

Did the catch not used to be - any payments you make towards the card go against the balance transfer first?

Meaning folk who used the card for a purchase had to pay 29% or whatever interest on the purchases until the balance transfer was cleared & they could start repaying the purchases….

Personal loan from your bank might be cheaper, & can be repaid earlier for just a couple of months interest

[TTmonkey]

rossub said:

How do you ask for a limit though?

Any time I’ve applied, the limit given depends on your circumstances - there’s nowhere to request a specific limit.

Last card I applied for, it asked how much credit limit I would find useful. I selected 8k. It gave 12k limit.

[ferret50]

AndyAudi said:

Did the catch not used to be - any payments you make towards the card go against the balance transfer first?

Meaning folk who used the card for a purchase had to pay 29% or whatever interest on the purchases until the balance transfer was cleared & they could start repaying the purchases….

Personal loan from your bank might be cheaper, & can be repaid earlier for just a couple of months interest

You are not understanding the basics!

Grab an interest free CC, best buy is one with a zero transfer fee. Transfer your existing CC balance to the new card, but...DO NOT USE IT TO BUY OTHER STUFF! Pay off at the minimum monthly rate and DO NOT MISS A PAYMENT! At the end of the free interest period, open another account and transfer the remaining balance, rinse and repeat until the debt is cleared....this gives you FREE CREDIT!

I currently have a Tesco CC card that I transfered £5.5k onto from two other cards. The Tesco card has a 30 month interest free period but I had to pay a 'transfer fee' of 3%. Repayments started at £56pm, now down to £51pm, but I stuck £5k into a Tesco 1 year fixed rate bond, this pays about £26pm, so man maths shows that my repayment is around £25pm, with the security that I can use the FRB to pay off in full should I need to.

At the end of several balance transfers I should still have my £5k earning and will have had several years free credit to clear my initial £5.5k CC debt.

Another option is to buy a 'Structured Product' with my £5k security that could pay me upto 7 or 8%, and use that to clear the CC balance, and I still come out with my capital intact.

[Chris Type R]

I currently have a 0% purchases card which I've put some house renovation costs on to. I think it was a 18 month offer which is due to expire in April from memory.

One of the small downsides to this is that I bank with NatWest as is this particular card - and having a CC with > 50% utilisation has a small negative effect on their own credit scoring. This is regardless of what sums are available in savings accounts to negate the borrowing.

[ferret50]

Chris Type R said:

I currently have a 0% purchases card which I've put some house renovation costs on to. I think it was a 18 month offer which is due to expire in April from memory.

One of the small downsides to this is that I bank with NatWest as is this particular card - and having a CC with > 50% utilisation has a small negative effect on their own credit scoring. This is regardless of what sums are available in savings accounts to negate the borrowing.

Agree!

The savings are there for your own peace of mind, so YOU know that in the worst case you can clear your debt.

But working the system to your own advantage is what you need to be doing!

Seems to be two trigger points at 25% and 50%, but the most important part is to NEVER miss a payment, set up a DD for minimum payment, you can always make an additional payment if you wish.

The borrowing at a low rate to invest at a higher rate needs much careful thought and a suitable escape route planning.

[AndyAudi]

ferret50 said:

You are not understanding the basics!

Grab an interest free CC, best buy is one with a zero transfer fee. Transfer your existing CC balance to the new card, but...DO NOT USE IT TO BUY OTHER STUFF! Pay off at the minimum monthly rate and DO NOT MISS A PAYMENT! At the end of the free interest period, open another account and transfer the remaining balance, rinse and repeat until the debt is cleared....this gives you FREE CREDIT!

I currently have a Tesco CC card that I transfered £5.5k onto from two other cards. The Tesco card has a 30 month interest free period but I had to pay a 'transfer fee' of 3%. Repayments started at £56pm, now down to £51pm, but I stuck £5k into a Tesco 1 year fixed rate bond, this pays about £26pm, so man maths shows that my repayment is around £25pm, with the security that I can use the FRB to pay off in full should I need to.

At the end of several balance transfers I should still have my £5k earning and will have had several years free credit to clear my initial £5.5k CC debt.

Another option is to buy a 'Structured Product' with my £5k security that could pay me upto 7 or 8%, and use that to clear the CC balance, and I still come out with my capital intact.

I am getting it, just urging a bit of caution.

I’m strongly of the opinion these %free deals attract only those who don’t have money or who are content to make a fairly trivial amount playing games that may potentially adversely affect their credit..

My man Maths

Free credit is only of real benefit if it’s avoiding you paying silly rates for credit, tucking it in a saving accounts is a waste of time…

Your example £5.5k for 30mths

Initial cost £165

Offset by a “gain” on investing £5.5k
Tesco seems to be offering 4.8% today so assuming you get that for 30mths = £660

Offset by interest on the repayments you can’t invest costing you on average £50mth? = 30mths at £50 = 1500of repayments ? Average(half) over term £750
£750 * 4.8% for 30mths = £90

So for me I see potential upside of £570 interest less £165 fee = £400 for 30mths. Hooray that’s wonderful but….simplistic approach incoming

Potential adverse, I borrow money, the jiggery pokery I do does something adverse to my credit rating (either cause I’m using too much % of my card limit/ the multiple cards create too much credit exposure/ applications for credit logged on my file/ affordability checks see I’ve an extra £50/mth outgoings or heaven forbid something unexpected happens in 30mths & I miss a payment….)
Now Say I borrowed a modest £100k for something the computer algorithms weigh up increased risk & offer me something a quarter of a percent 0.0025 different… like at mortgage renewal

0.0025*£100,000 = £250 a year, £20ish more a month. = £600. (Wipes out the gain)

However that’s hypothetical, I have money, I earn interest elsewhere & max my Isa allowances so I ’d be taxed on the £570 interest at 40ish% = £230 of tax. Taking my upside to just £170 for 30mths … waste of time & effort.

Edited by AndyAudi on Tuesday 6th February 09:39