David Lock

I have a Citi Card and they are offering a balance transfer rate of 4.9% until paid off. 3% charge, maximum £95. Minimum repayment is about £25/£1000 per month.

So what's the catch and why should they loan me money at less than base rate? Is it just in the hope that I will be using their card for purchases?

dl

SteveScooby

iTrader: (2)

Yes

davegtt

Yup. Thats why they have a massive interest rate for everything else

PeteBrant

Agreed.


Low interest rate for the life of the balance are far more sensible than 0% followed by a hike to 15% after 9 months or whatever (assuming you aren't going to pay off the entire balance within the 9 months ovbiously)

David Lock

OK - thanks. I paid off the purchase bit last month so I just have to rearrange some internet payments which use the card (iTunes, Amazon etc) and use another card for general purchases.

I just wondered if I was missing something obvious but your comments have reaasured me so I'll write myself out one of their cheques dl

stilover

The catch is, as you are transfering they assume you are in debt and are making minimum payment. Or at least you aren't paying off you bill every month. They also assume that you will carry on like this for years. In the end they'll get more money off you in the long run.

I had a friend many years ago who earned about £125 a week after tax. He was £5000 in debt on his credit cards. Minimum payments every month.
He decided to get a bank loan to pay his credit card bills off, which he did. Unfortunately he didn't cancel his credit cards, and ended up within 6 months of racking up another £5000 debt on his cards by taking his lass on holiday and blowing the rest on nights out and buying clothes.

So not only was he paying off a £5000 bank loan, but also a £5000 credit card debt.

PeteBrant

This is the number one way people fall into unmanageable debt.

EddScott

I've got a fair amount of debt at the moment. I've thought about lumping it all into one but I haven't got the discipline not to do it all over again. Might sound weak but at least I'm not kidding myself.

Thankfully I've made an agreement in work that all extra monies is paid directly to my debts. With a bit of luck it'll be shifted by the end of the year

alistair

It also only works if you never use the card for anything else. Otherwise you will be charged much higher interest on what you spend and any re-payments will always be against the lower rate borrowing.

zip106

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David Lock

Graz

Martin Lewis