Interest over year on offer

I make it 75p - but let's stick with 71p for now.

Be careful with this one. When you make a repayment of the 50 spend, do they credit your balance transfer first or do they credit your most recent spend. Normally it is the latter. So, after spending 50 in month 2, it will cost you twice as much (i.e. 71p * 2 = 1.42). Then in month 3 after spending your 50, it will cost you 71p * 3 = 2.13. Adding this up, in a year it will cost you 39 (or thereabouts).

Also if you ever manage to spend exactly 50 in a month that would be impressive.

If you ever spent less than 50 in a month, e.g. 49.99, I assume they would really sting you.

I would advise a word of caution with the calcs. The interest charged could turn out widely different if you spend less than 50 every month, more than

You are right about the interest compounding over time.

I think the most relevant method here is:

the theoretically correct method which assumes you pay off your entire balance after exactly one month:

even then these are approximations to reality and actual amounts could be significantly different.

You might be lucky and the priority of allocation of incoming money is interest first, transferred balance second, and new spending last. That would prevent interest adding up and compounding the balance.

Actually, Mr Flipping seems to have miscalculated. Adding it up over a year would cost 71p times (1+2+3+...+12x), which is more like £55.

Also, you said the 0% deal is for the life of the balance. If that life is only a year, then £55 for an average balance of £1500 is not too bad (3.7%), but what if you want to take longer than a year to pay it off? In year 2 it'll be £55 on the new spending in that year, plus 17.9% of the £600 amassed in year 1. That's £162. In year 3 it'll be £55 plus 17.9% of £1200, i.e. £270. For the whole 3-year period, then, that'd be £487 altogether.

That would correspond to about 10% per year. Still reasonable? I suppose it's still better than paying it off at the full 17.9%. But it'd be cheaper to bung it on the mortgage.

In message , No Flipping writes

You cant effectively calculate the monthly interest rate charged by back calculating form the APR with knowing the interest free period. For credit cards the APR is calculated using a cash flow of all the payments made assuming that the minimum payment is made each month at the last possible day each month until the debt is repaid.