You don't understand the word liquidity do you lol. I have 15k of debt and 15k of savings - net position is 0. I can't just spank it on frivolous things else I'll be in actual debt.
Too many credit cards? aka "The Credit Card thread"
- Thread starter robfosters
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Soldato
It's a financial tool like many others. People can irresponsibly use them, same as loans.
If you understand how they work and how to avoid interest/have some self control then they are arguably superior to debit cards, but if not then I'd avoid.
Soldato
It is important to think of other consequences. I could take out a 0% card and spend on it for 22 months, saving the cash at say 5% and earning a couple hundred quid in interest.
Ok I understand that is easy really and not much effort.
But 2 years ago I didn't want to do it because I was about to get a mortgage, and I have to remortgage in 2 more years so you have to think about how tens of thousands of cc debt looks in that respect.
And the discipline has to be there to not spend on stuff you wouldn't normally.
Im not sure it's worth that risk for a couple hundred quid interest, that's my dilemma.
AMEX do seem to like big limits, I've got something like 23k limit on my membership rewards CC and about 15k limit on the BA one, add in my charge card with it's unspecified limit and that's a fair amount.
Soldato
I'm not talking about for stoozong purposes (and none of my last few posts here suggested this for snoozing).
Just normal everyday spending vs debit is my angle.
Just normal everyday spending vs debit is my angle.
shoulda got a 10 year mortgage
what hungyhippos said (stoozing or not)
if you're the type that spends because there's money in the account/below the credit limit then there's only one person to blame
Soldato
shoulda got a 10 year mortgage
what hungyhippos said (stoozing or not)
if you're the type that spends because there's money in the account/below the credit limit then there's only one person to blame
You seem very dismissive of the cons to this. It works for you great, but as you said this ain't mega bucks and have to question it's worth.
20 years ago when stoozing was massive savings account interest was double what it is today (and even 5% is recent, interest rates were sub 1% for 10 years prior).
Do you do the bank account switcheroo? There's probably still between £500 and a grand available for no effort in that process if you haven't already taken advantage of it.
of course i do
it depends on how you stooze
i'm currently stoozing £23k (i know i said £30k earlier...but i've just checked my spreadsheet...and £30k was an overestimate
) that's split between regular savings/easy access/cash + S+S ISA and PB over 19 monthssay it's 4% average interest for simplicity's sake that's easily £1k free money
i'm dismissive of the cons because as long as (a) one is not impulsive, and (b) pay the balance at the end of the 0% rate...there isn't a con
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Soldato
it depends on how you stooze
i'm currently stoozing £23k (i know i said £30k earlier...but i've just checked my spreadsheet...and £30k was an overestimate
say it's 4% average interest for simplicity's sake that's easily £1k free money
i'm dismissive of the cons because as long as (a) one is not impulsive, and (b) pay the balance at the end of the 0% rate...there isn't a con
Ok that amount is worth it I agree, but it's a 3-4 year accumulation period for me. Which can't be done on a single card so I'd need at least one probably two interim balance transfers.
If you've built up 25k then a 2% balance transfer fee is half of your interest gone.
You're doing your weird thing where you mix up periods again. If he does nothing he makes the full amount.
If he does a BT he gets to make the money again less the 2% fee.
You can't charge the first transaction the fees of the second transaction - that's just headline grabbing twisting.
you know that there are cards with 0% fee right? natwest, santander and virgin spring immediately to mind
you can also put any capital expenditure, insurance, holidays etc on there in addition to any day-to-day transactions
...or buying a 4090
Soldato
I'm not.
Let's say you want to make a grand in interest. At 5% interest rate you need £20k balance.
First you have to accumulate that amount. 20k in a year ex mortgage and other bills that can only be paid direct debt is a lot. Let's say you have to accumulate for 2 years at 10k per year.
So you take out a 0% spending card for 2 years. In the first year you accumulate 10k, which is an average of 5k over the year at 5% which is £250 interest.
Then in year 2 you earn 5% on the full £10k plus another £250 on the next 10k.
So that's a grand in total over 2 years, not per year. So 500 per year has been earned on average and it's taken you 2 years to accumulate that.
So now you have 20k balance which could earn you 1k in interest in a year. But to keep it for another year you have to BT it.
If you can't get a free BT (free BT tend to be shorter timeframes so you may need two in a year), then you either pay a fee or pay back the cc and start over.
There's only two cards on MSE right now with 0% fee (all the long BT offers are 3% fee or more). Barclaycard and NatWest. If you can't get either of those or already have them, you're stuck.
In 2 years time who knows what the rates will be. If interest rates have dropped to 2-3% it's even less worth it.
Sure if you can keep it going off free BT then you build up quite a pot but that's harder to do now than it was back in the day (less offers).
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You don't aim to accumule 20k for a start. And 1k for 2 years of zero effort is good money. Then you can rinse and repeat for as long as the gravy train runs until you clear them off.
Even with a fee most BTs are longer than 12 months, too. I've just done a Tesco BT for 26 months iirc.
The main reason I do it, is to make an emergency liquidity fund. The extra cash is a perk
Soldato
There's also the min repayment to think about. If I remember correctly Barclaycard was a 3% min repayment, if you've accumulated 20k that's 600 a month you have to pay back, which will make quite a dent in the savings amount.
Soldato
Don't get high horse with me. I understand it perfectly I'm questioning it's value.
Soldato
Instead of being cryptic, tell me what you disagree with?
It just means you get to keep more of the capital you've saved when it all unwinds. P.s. it ain't 600 I only pay 83mo on 8k balance.