Too many credit cards? aka "The Credit Card thread"

[tamzzy]

Instead of being cryptic, tell me what you disagree with?

dlockers has explained it

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.

so to take your example, you make £1k for the first two years
it's only in year 3 that you need to factor in that 2% transfer fee if there is one

if you don't transfer, there's no fee...and you're still £1k richer
if you do transfer, then it's your savings rate vs your balance transfer rate, so if it's 4% savings vs 2% balance transfer, you're still 2% quids in

 

[danlightbulb]

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.

So your card is less than 3% then. When I had one, Barclaycard's min repayment was definitely 3%. I'm using Barclaycard as an example because it's the longest 0% deal on MSE right now at 22 months for purchases.

After year 1,if you've accumulated 10k and the repay is 3% then you'll be having to pay back 300 a month. So if you're accumulating say 900 a month that will at that point be down by a third, slowing the accumulation rate.

Maybe the min repayment is lower now than it used to be.

 

[tamzzy]

Maybe the main repayment is lower now than it used to be.

I've not had a card with more than 1% minimum repayment

edit: yes, you're right. barclaycard only recently reduced their minimum to 1%

Barclaycard's cutting minimum repayments – you could be in debt YEARS longer paying DOUBLE the interest

If you've got debt on a Barclaycard, it's likely the minimum you have to repay each month will be cut from 22 July, as the bank is changing how repayments are set for millions of customers.

www.moneysavingexpert.com

 

[danlightbulb]

dlockers has explained it


so to take your example, you make £1k for the first two years
it's only in year 3 that you need to factor in that 2% transfer fee if there is one

if you don't transfer, there's no fee...and you're still £1k richer
if you do transfer, then it's your savings rate vs your balance transfer rate, so if it's 4% savings vs 2% balance transfer, you're still 2% quids in

Yes I completely understand.

What I'm saying is I'm not sure that's worth it. First year 250 interest. 2nd year 750 interest.

With a 2% fee, 3rd year around 600 interest plus any further accumulation you can do on a new card.

The average there over 3 years is only just over 500 a year and you've got min repayments to think about which even at 1% will now be 200 a month.

Whilst it would be nice to have a free 500 a year, is it worth having 20k on your name for? That's personal choice but it's pretty borderline.

Would you still do it if average earnings were 250 a year?

 

[dlockers]

So your card is less than 3% then. When I had one, Barclaycard's min repayment was definitely 3%. I'm using Barclaycard as an example because it's the longest 0% deal on MSE right now at 22 months for purchases.

After year 1,if you've accumulated 10k and the repay is 3% then you'll be having to pay back 300 a month. So if you're accumulating say 900 a month that will at that point be down by a third, slowing the accumulation rate.

Maybe the main repayment is lower now than it used to be.

Never seen anywhere close to 3% in my 20+ ccs. I pay 50 quid a month to service 5k at Tesco ATM. 83 to service 8k at Rbs. I see the spread between declining balance and increasing savings pot as part of the benefit.

 

[dlockers]

Yes I completely understand.

What I'm saying is I'm not sure that's worth it. First year 250 interest. 2nd year 750 interest.

With a 2% fee, 3rd year around 600 interest plus any further accumulation you can do on a new card.

The average there over 3 years is only just over 500 a year and you've got min repayments to think about which even at 1% will now be 200 a month.

Whilst it would be nice to have a free 500 a year, is it worth having 20k on your name for? That's personal choice but it's pretty borderline.

Would you still do it if average earnings were 250 a year?

Id do it if only washed it's face. Why give the bank 20k when you can have 20k. Liquidity is king and means I can borrow against myself.

 

[tamzzy]

is it worth having 20k on your name for? That's personal choice but it's pretty borderline.

of course, seeing as i also have said £20k in liquid cash too

Would you still do it if average earnings were 250 a year?

no brainer for me, yes
damn those gucci belt wearers, turning down free money

min repayments to think about which even at 1% will now be 200 a month.

well those payments already come out of cash you do have, not cash you don't... so hardly a big issue is it now?

Why give the bank 20k when you can have 20k. Liquidity is king and means I can borrow against myself.

this

 

[danlightbulb]

Id do it if only washed it's face. Why give the bank 20k when you can have 20k. Liquidity is king and means I can borrow against myself.

Except you can't spend that cash, at least not unless you can recoup it quickly. Because you need it to pay back the credit card when the offer is over.

Isn't spending that cash exactly the trap that these banks are hoping for?

those payments already come out of cash you do have, not cash you don't... so hardly a big issue is it now?

Sure, but it does slow the accumulation into your savings account yes?

I.e in month 1 you accumulate say 900. By month 13 you have a 100 min repayment on your card so your accumulation is now 800. By month 24, your accumulation is now 700 (200 min repayment). So that will slightly suppress the interest earned.

 

[tamzzy]

Except you can't spend that cash, at least not unless you can recoup it quickly. Because you need it to pay back the credit card when the offer is over.

that cash has already been spent as soon as you used the credit card, it's now in "stasis" earning you interest from the bank...rather than you paying the bank immediately, and the bank earning interest at your expense

Isn't spending that cash exactly the trap that these banks are hoping for?

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

^

Sure, but it does slow the accumulation into your savings account yes?

you're missing the point, or maybe i just don't understand yours.
the savings account already has the cash, im not accumulating the cash to spend (ie i'm not banking on future earnings to spend now)
so, however much/however long i can defer paying the majority of my spending is in my interest...figuratively and literally speaking

 

[danlightbulb]

cash has already been spent as soon as you used the credit card, it's now in "stasis" earning you interest from the bank, rather than you paying the bank immediately, and the bank earning interest

Yes but dlockers is talking about having that cash as liquidity if he needs it. If he spends it, he is no longer in a net neutral debt position.

missing the point, or maybe i just don't understand yours.
the savings account already has the cash, im not accumulating the cash to spend (ie i'm not banking on future earnings to spend now)
so, however much/however long i can defer paying the majority of my spending is in my interest...figuratively and literally speaking

The min repayment has to come from somewhere. If it's from the savings account it's costing you a bit of interest. If it's from your salary it means you're not saving it and it's costing you a bit of interest. Just means your actual returns will be a bit less than the headline rate because you have to meet min repayment.

 

[tamzzy]

Just means your actual returns will be a bit less than the headline rate because you have to meet min repayment.

yes, but still free money. i don't see your point.
from my point, i don't turn down free money, especially when there's minimal work involved to gain said free money. gucci belt wearers may, but unfortunately i'm not said wearer.

Yes but dlockers is talking about having that cash as liquidity if he needs it. If he spends it, he is no longer in a net neutral debt position.

if he needs it

^

 

[tom_e]

Better to spend that money and be effectively getting it at 0% leveraged against the CC debit than having to get a loan or stick it on a non 0% card.

 

[danlightbulb]

How often do you put the saved cash away?

Eg if you go buy a bottle of wine tonight, on the cc of course, do you immediately move the 10 quid or whatever from your current account into your savings account?

Or do you do it weekly, monthly?

 

[danlightbulb]

Better to spend that money and be effectively getting it at 0% leveraged against the CC debit than having to get a loan or stick it on a non 0% card.

Depends if you recoup it in time doesn't it? If you can't, the apr on a cc post offer period will be way higher than a loan, and there's always a risk of not being able to get a replacement BT offer to rescue you.

 

[tamzzy]

How often do you put the saved cash away?
Eg if you go buy a bottle of wine tonight, on the cc of course, do you immediately move the 10 quid or whatever from your current account into your savings account?
Or do you do it weekly, monthly?

if that's aimed at me, then personally, i only keep the minimum in my current account maybe £1500 or so, to cover the mortgage, bills (and minimums )
i don't spend on my debit card if i can help it, the vast majority is on credit
money is moved straight away when the paycheck lands into my current account
for all intents, practically all my money is in a savings account (and ISA, PB, S+S etc) earning interest/dividends, so no day-to-day movement needed like you're describing

 

[danlightbulb]

if that's aimed at me, then personally, i only keep the minimum in my current account maybe £1500 or so, to cover the mortgage, bills (and minimums )
i don't spend on my debit card if i can help it, the vast majority is on credit
money is moved straight away when the paycheck lands into my current account
for all intents, practically all my money is in a savings account (and ISA, PB, S+S etc earning interest/dividends), so no day-to-day movement needed like you're describing

I see. I keep a close eye on all my current account spending to make sure I only spend what I earn and no more each month. Everything I buy goes on a spreadsheet.

So I'd want to do the same with a 0% cc to make sure I didn't get lifestyle creep.

 

[dlockers]

I see. I keep a close eye on all my current account spending to make sure I only spend what I earn and no more each month. Everything I buy goes on a spreadsheet.

So I'd want to do the same with a 0% cc to make sure I didn't get lifestyle creep.

I subtract my pot from the balance and divide by months remaining every few days. You can do it at whatever frequency you want. I like to check my accounts every single day anyway.

 

[tamzzy]

I see. I keep a close eye on all my current account spending to make sure I only spend what I earn and no more each month. Everything I buy goes on a spreadsheet.
So I'd want to do the same with a 0% cc to make sure I didn't get lifestyle creep.

same, i do keep a close eye as well
you can do the same with a CC as you do with a debit card

i am thankful i am in a privileged position where i can put away the majority of my income as fixed savings first, before needing to see if i can afford to spend on wants
for me, i still work to the 20-30-50 rule but with a slight twist
20% discretionary spending
30% fixed spending (mortgages bills etc)
50% fixed savings that get squirrelled away as the paycheck lands, so it never gets touched

anything i don't spend in that 20% discretionary portion automatically become savings

 

[robfosters]

I don’t get this snoozing stuff.

I’ve just whacked £3k on a 30 month 0% balance transfer card. So how can I make money from that exactly?

 

[dlockers]

I don’t get this snoozing stuff.

I’ve just whacked £3k on a 30 month 0% balance transfer card. So how can I make money from that exactly?

Put the £3k you should have had available to pay that off into a savings account.