Please explain CC balance transfers

C

Ciaran_06

Guest
I know credit card balance transfers are regularly discussed on this board but I don't even understand the basics of how they work so I was hoping someone could help?

I owe about E5,500 on my CC which needs to be cleared in mid August but I don't think I'm going to make it. I will definitely be able to clear it completely within three months (money due to me then) so I'm hoping to be able to transfer to another CC company to give me a little breathing space.

If I am able to transfer the balance how does it work then? Do I have to pay off a little every month or can I pay off the whole sum at the end of a particular period (eg 3 months?).

Does the new CC company clear the debt with the old one and then I repay the new company?

Sorry for my stupidity, I just don't understand any of these things! Please help if you can, thanks.
 
Ciaran_06 said:
If I am able to transfer the balance how does it work then? Do I have to pay off a little every month or can I pay off the whole sum at the end of a particular period (eg 3 months?).
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You can pay off a little at a time if you wish. One thing to watch is how payments are allocated-are they first set against any balance transferred, or against purchases. In the case of AIB, I know that any payments made are first set against purchases, with any excess of payments made over the balance outstanding on the current bill set against a balance transfer.

Read the ts and cs of your own particular card carefully, to ensure you pay no interest on purchases.


Ciaran_06 said:
Does the new CC company clear the debt with the old one and then I repay the new company?
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Yes.

Ciaran_06 said:
Sorry for my stupidity, I just don't understand any of these things! Please help if you can, thanks.
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There's no stupidity here-this is what AAM is for-answering questions.

You may find this Key Post useful.
 
That's brilliant, thanks a million for helping me out. What a fantastic forum!
 
be aware
the new lender may not sanction a sufficient credit limit to enable you transfer the original card's balance.
 
You will be required to pay a minimum balance on each montly statement. This balance is set by the credit card company and can vary.

There are some credit card companies that give you 0% on balance transfers and 0% on purchases . You should go to one of these companies if you intend making purchases on your card.

I suggest that you apply to one of these companies immediately - all these matters take time.

When your lump sum comes through you can either pay it off your credit card immediately or invest it temporarily in for example Northern Rock at 3.6% and then pay off your a/c just before your 0% finance runs out.

Make sure that you tell your new credit card company when you are applying that you specificially wish to clear your existing credit card balance.

Make sure that you close your existing credit card otherwise you will pay stamp duty (€40) on it as well as on the new card.

I'm sure that many of these details are in the key post, but it's no harm to reiterate them here.

Marion
 
Marion said:
You will be required to pay a minimum balance on your transfer. This balance is set by the credit card company and can vary.
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I'm presuming you mean the minimum balance on any monthly bill?

It should be emphasised that paying the minimum balance will not be enough to exempt you from interest on purchases, unless they are at 0% for an introductory period.
 
Make sure that you close your existing credit card otherwise you will pay stamp duty (€40) on it as well as on the new card.
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And, make sure that your old CC company sends you a letter confirming payment of Gov. Tax for 2006/7 (this year). You should then pass this on to your new CC provider [keep a copy], and you won't be charged next April for CC Tax.
 
irishpancake said:
And, make sure that your old CC company sends you a letter confirming payment of Gov. Tax for 2006/7 (this year). You should then pass this on to your new CC provider [keep a copy], and you won't be charged next April for CC Tax.
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And be aware that certain card companies need constant hounding on this issue.
 
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