Advice on Credit Card switching please???

Hi guys could do with some advice please, have a credit card with AIB and I owe 8,000, i'm finding it hard to make the repayments on it, the interest is a killer. See some Banks now are offering 6 months free interest, was wondering should i try this and pay off as much as I can. I would be grateful if anyone could offer me some advice. Thanks.

If you can avail of the offer of the balance transfer AND be very strict and disciplined with yourself it is a good option. You must have a plan though to benefit from the balance transfer

1) Absolutely do NOT use the new credit card at all (even for something small) until you pay off they outstanding balance you have transferred
2) If possible, pay off the outstanding balance in full within the 6 months (so that would be €1,333,34 per month)

The reason is that while you get 0% on balance transfers and that is peachy any payments you make go to pay off your transactions on your new card first. So if you use the card you could find yourself with the same underlying €8k still to pay off. Have a look at the terms and conditions of any credit card to see how they apply payments you make. Below is the list from the BOI website (I just picked one of them - they tend to be similar). As you can see, there are nine items which will be paid preferentially to your balance transfer, so the moment you use it, you scupper yourself. As you can also see, the order in which the payments are applied is designed to minimise the chance of you paying off your debt. All fees come off before you pay down any of your transactions.

11.
(a) We will only consider a payment made when it is received by us and credited to your Account. We will apply payments towards what you owe us in the following order:
(i) Any monthly payment due to us under a Payment Plan (oldest first)
(ii) Cash advances shown on previous statements or latest statement
(iii) Interest on cash advances
(iv) Cash advance fees
(v) Annual Fees
(vi) Insurance premiums
(vii) Account Fees and charges other than annual fees and cash advance fees
(viii) Interest on any fees and transactions, which you have not paid when due to us, excluding interest on cash advances
(ix) Purchases shown on previous statements or the latest statement
(x) Balance Transfers
(xi) Transactions and amounts you owe us that have not yet appeared on your statement in the same order as above
(xii) Amounts owing but not yet due under Payment Plans (oldest first)

If you cannot stick to that rather austere approach, a better or gentler option may be to get a loan to pay off the balance, the interest rate will be lower and you wouldn't be limited to paying it off in 6 months. However, you need to address the underlying reason you have run up the credit card debt or else you will find yourself in a year's time with another credit card debt while you try to pay off the loan you took out to clear the previous credit card debt.

Anned121 said:

Hi guys could do with some advice please, have a credit card with AIB and I owe 8,000, i'm finding it hard to make the repayments on it, the interest is a killer. See some Banks now are offering 6 months free interest, was wondering should i try this and pay off as much as I can. I would be grateful if anyone could offer me some advice. Thanks.

Click to expand...

Its quite unlikely that a new provider would be willing to accept this transfer level, given the fact that you are having difficulty meeting repayments, which I would imagine are at least 300-500 per month?

Talk to AIB about either reducing your minimum payment temporarily or else turning it into a loan. It would at least fix your costs.