Monday, 19 October 2009

Credit Cards - transfer to 0% APR account or just get it paid off?

Now, I have nearly £2000 on the credit card that I've accumulated over a few years. I do still put the odd thing on it when I don't have the hard cash with me.

Now, I've got a 20% APR on that card. (I could do better, yes)

Which means, oooh, £200 a year is going down the drain on interest repayments.

Now, this gives me a sub target of sorts, in that if I get this halved in 3 months, and cleared in 6 months time then I can save roughly £140 on that.

Or if I can somehow get a 0% APR card, and transfer the balance across, pay it off in full when that 0% APR period is over, that will save me paying interest.

I've had a look, and there are a number of credit card providers, such as Virgin, who do a 0% APR on balance transfers for roughly 12 months for a one off 3% fee.

Have a look at some deals here (I've a feeling that website will become my best friend over the next while)

3% of £2000 is £60. So, If I went down this route, I would save £140 right off.

Hmm. So I have two options here:

1) Simply try to get the balance paid off, first halfed by month 3 then paid off in full by month 6. I should save £140ish this way

2) Transfer the balance to a 0% APR account, pay a 3% fee, then pay off during the 12 month 0% APR period. This saves me £140.

Basically, if I was stuck in a really bad rut and totally unable to pay anything but the minimum balance for the next 12 months, I would be going for option 2 right now.

But, because I do tend to have a little left over per month, and I believe that I will find enough in savings and extra revenue to help me get option 1 out of the way, I think I am better off just going for it. Clearing the card (and car loan) is the goal of this thing anyway. Option 1 it is.

I will add £140 into the savings total on a provisional basis. I am confident I can make this saving, but you never know, I could slip up.

Anyway, for the first £2000 I find/earn during this project, you know where that money is going - straight onto clearing that card.

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