balance transfer

Sorry of these questions seem dumb!

I have a balance of 2900 that I'm going to transfer to a new 0%HSBC card I have, but I've got a couple of questions:

1) If I make this transfer to the HSBC card, then spend/withdraw cash on the HSBC card, presumably that won't affect the 0% interest on the balance transfer amount?

2) HSBC say I can pay off other credit cards/store cards and take advantage of the 0% period- that presumably means I can't pay off an overdraft or other debts with it and still pay 0% interest?

thanks

In general, never ever take out cash on a card. The exact rules for other purchases can often mean that you pay interest. I usually just use the new card for a balance transfer and NOTHING else. If you want some cash out as well then get a flexible account that will allow you to transfer cash into and out of it without penalty, the only one I know of is the Egg Money Account (this has a credit card part, so has a suitable number for a transfer).

Example: egg money account zero balance, do a balance transfer from your hsbc for the max. you can, or need (bear in mind any transfer fees), when in the Egg account it immediately starts earning interest at a reasonable rate, then transfer whatever you need to your existing credit card account (there is NO fee for this as your Egg account is in credit) transfer whatever you need in cash to your bank account (again no fee and all done online)

Pay the HSBC account off as necessary, keep a very careful note of when you need to have it paid back by and make sure you do, as they will sting you the moment they can.

Mrcheerful

I assume the 0% is just on balance transfers, not purchases too?

It absolutely will! A cynic would say this is exactly the mistake they want you to make.

If you read the T&C's very carefully you'll probably find that payments you make to the card will go to pay your balance transfer off *first*, before spending/cash.

So if you transfer 2900, then go out and spend 500, then pay 500 off when you get the statement:

They'll take the 500 of the balance transfer, leaving you with 0% on 2400, and the

500 spending will *remain on the card* at probably a rip-off rate of interest - and you can't pay it off until you've completely cleared the balance transfer!

Usually not, some cards allow this but most don't.

Suggest you have a read of the credit card section on:

Don't forget the typical 2% upfront charge for the balance transfer.

But still I guess it could be worth it for a larger debt if you cut up the card once you get it (assuming they don't charge you for not using it..!)

And read the small print. A lot have it so if you're ever late paying it every month they'll up the interest level til you squeal. :)

The OP should take care to cancel any Payment Protection insurance on the card as well. The same thing will apply to these premiums, which can be quite considerable if you've transferred a few thousand pounds. The PPI premiums will be piled on monthly attracting interest and cannot be paid off until you've paid off the balance transfer. The same also applies to the balance transfer fee that is initally charged!

Forgot to cancel the PPI on a recent balance transfer to my cost. I've cancelled it now but the 35 quid or so will attract interest for the duration of the balance transfer :(

I don't think they would legally get away with charging you interest on the BT fee itself as that would mean it's not possible to pay 0% interest, so would make it false advertising. Certainly halifax did not charge me interest on my initial 2% fee and it's been running a few months now.

off when you get

£2400, and the

current HSBC deal is 0% on balance transfers until 02 April 2008 and

0% on new purchases for 6 months. BT fee is 2% min £5.

Ian

Hmm..I'll be having some words with Egg then. I appear to have to been charged interest on the balance transfer fee for a recently ended 0% balance transfer. I did _not_ use the card for any other spending during the period.

As to the legality of it , I would assume they would argue that the balance transfer fee is separate to the amount borrowed, and that no interest has actually been charged on the amount borrowed. I notice the CC companies are careful to call these deals "0% interest" and not "0% APR"

I'm happy to see that some cards have not (yet) caught on to this weasel way of extracting more do$h from their customers.

At 13:39:00 on 28/02/2007, Andy Pandy delighted uk.finance by announcing:

It won't. Read the question again. The 0% on the balance transfer amount will be unaffected.

However, you're correct that the balance with the lowest rate will almost certainly be paid off first. So balance transfers before purchases before cash advances.

snipped-for-privacy@yahoo.co.uk writes

Digressing a little.... All the correspondence I read about credit cards and loans reinforces my belief that you should only borrow money when you don't really need to. In other words, when you have enough savings (or property in extremis) to pay it off immediately if necessary.

If I can't afford something, I reason that I can't afford to borrow the money and thus pay even more for it. If I save up for it, I find the interest on the savings will usually fill the petrol tank.

I'm just an old dinosaur I suppose. :)

it has taken me to 45 before realising the same, I now get richer rather than poorer on a slow but steady basis, largely by following readily available advice (when it is logical etc.), and ignoring advice from banks and accountants (or at least being very critical first)

At 11:42:30 on 01/03/2007, Gordon H delighted uk.finance by announcing:

Ah yes, but you don't get to have it *now*!

The odd thing is that quite often something will turn up that does the job just as well at much less cost, also by the time you have the money a better version is available or you have changed your mind. The only exception is if I can make more by borrowing than not, expensive tools for instance that will earn some money in the very near future or save me time. Usually you can get some form of interest free if you look about, for instance my Abbey credit card just send a flyer that is ' zero per cent on all purchases till slept. statement' well worth using for the next few months, especially as I have a large car insurance bill very soon, but I will ensure it is cleared on the right date (I have been stung before!).

Mrcheerful

Which is another sneaky trick - a purchase 0% deal that ends before a BT 0% deal. Meaning that if you transfer a balance and do some spending, when the 0% on new purchases ends your payments will probably go to pay off the BT, meaning that again - you'll be paying a rip-off % on the purchases until you've paid the BT's off!

OK, but I assume he meant that he'd be able to spend and pay off his spending without his BT amount being affected.

Yup.

There's the rub.

"Buy now, pay later" used to sound good to me, now it sounds unnervingly menacing.

OTOH credit cards are a necessary evil (try hiring a car without one). And they do give you free money, so it's a case of making sure you exploit them, not the other way around.

- Hide quoted text -

Alex writes

But I did one time at least. Wanted a new car, my wife terminally ill.

In 1995, Vauxhall had a 2 year zero interest deal, if you paid half now and the rest in two years (or go into finance and interest).

I paid the 6 Grand and drove away, knowing I had a TESSA maturing in two years, with which I paid off the other 6 Grand.

Ok, I used up an investment, but for two years the other half of the payment was earning me tax free interest.

At 19:41:17 on 01/03/2007, Gordon H delighted uk.finance by announcing:

You took a loan, even if it was interest-free. This is about not borrowing *at all*.

Alex writes

Isn't a balance transfer borrowing to pay off a loan, in a manner of speaking?