Credit card interest rate 3.9 % till October.

[maryanne40]

I have an MBNA credit card which I pay off every month. I've had a letter from them informing me that I can avail of a transfer interest rate of 3.9 % till October. I can also write a cheque drawn on the credit card for the same rate, up to 90% of my credit limit....(which is 20000)

I also have a credit union loan of 30000 on which I am paying 7.5 % over 5 years. My question is, if I were to write a credit card cheque for 5000 (for example) and pay this off my credit union loan would there be any advantage to me in doing this? I'm assuming that I could pay back the 5000 plus 3.9% in October to the credit card by 'redrawing down' the amount from the credit union.

I realise any saving is minimal on 5000 but it's the principle of it I'm interested in. Any thoughts at all anybody? Am I missing something? Thanks.

 

[moneyhoney]

MBNA cc cheques usually have a high rate of interest and you pay interest from the day the cheque is cashed - much the same as a cash withdrawal on a cc. I know you say it's the same rate but in my experience they have v high interest rates - just maybe check the small print.

 

[demoivre]

I have an MBNA credit card which I pay off every month. I've had a letter from them informing me that I can avail of a transfer interest rate of 3.9 % till October. I can also write a cheque drawn on the credit card for the same rate, up to 90% of my credit limit....(which is 20000)

I also have a credit union loan of 30000 on which I am paying 7.5 % over 5 years. My question is, if I were to write a credit card cheque for 5000 (for example) and pay this off my credit union loan would there be any advantage to me in doing this? I'm assuming that I could pay back the 5000 plus 3.9% in October to the credit card by 'redrawing down' the amount from the credit union.

You would have to make monthly minimum repayments on the cc balance of €5k also .

MBNA cc cheques usually have a high rate of interest and you pay interest from the day the cheque is cashed - much the same as a cash withdrawal on a cc. I know you say it's the same rate but in my experience they have v high interest rates - just maybe check the small print.

MBNA regulalry offer me specials as per the op - always cheques and transfers at the special rate but cash at your usual rate .

 

[jquinn]

Just transferred 10K from MBNA to current account on this offer. Do watch out for the small print. e.g.
if you've got 4k at 3.9% and you've also got say 2k of purchases at 18%, then the money you pay in each month goes against the 4K - not the 2k. So you'll have to make sure you pay off all your purchases - plus usually you pay nothing on your purchases if you clear them each month - but because you won't be clearing your account, you'll be paying 18% on your purchases from the day you buy them. Taking out this loan could easily have the effect of having you pay 18% on your loan rather than the credit unions 7.5% and 18% on your purchases when you would have had no interest to pay.
Loan works for me as I don't make any purchases with MBNA card.

 

[maryanne40]

Thanks Demoivre and Moneyhoney.....yes I was very sceptical and that's why I posted here....but I rang them today and the rate definitely applies to cheques as well...I do take the point though about paying off at least the minimum on the putative 5000.

JQuinn, I'm very interested to hear that you have actually done it and what you say about not using card for purchases makes absolute sense....my ordinary rate is 7.9 but even still the principle of what you are saying applies.