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An opportunity to pay just 1.9% for your personal loan or overdraft for 12 months
Andrew Hagger of Moneynet.co.uk looks at the latest credit card promotional offer that comes with a useful twist.
Whilst interest free deals allowing you to switch balances from one piece of plastic to another are ten a penny, the option to use a balance transfer to clear non card debts is a rare opportunity to save on expensive loan or overdraft interest.
MBNA is today launching a Platinum credit card offering balance transfers and money transfers at a promotional rate of just 1.9% for 12 months.
Unlike a balance transfer transaction, a money transfer can be paid into your current account, thus giving you more flexibility and opportunities to cut your interest costs.
The other big plus point with this deal is that the usual hefty money transfer handling fee of 4% does not apply to transfers made within the first 90 days.
A £2500 personal loan could easily set you back £272.96 in interest in 12 months or an overdraft of the same size almost £500 (details below), whereas to borrow this sum with MBNA at 1.9% for 12 months will cost you just £47.50 in interest. (The standard 4% handling fee in this scenario would have normally set you back £100).
This is an excellent opportunity to get to grips with your overdraft and save some money in the process. The interest rate on the card reverts to 16.9% APR after 12 months, so make the most of the low rate and knock your debts into shape whilst you can.
If you’re smart, you’ll have cleared your balance within the promotional period, if you don’t then you’re exactly the sort of profitable customer that credit card providers dream of.
Borrowing type | Amount | Interest rate | Interest cost 12 months | Potential saving |
MBNA – Platinum card | £2,500 | 1.9% | £47.50 | N/A |
HSBC - overdraft | £2,500 | 19.9% | £497.50 | £450.00 |
RBS/NatWest - overdraft | £2,500 | 19.89% | £497.25 | £449.75 |
Lloyds TSB classic - overdraft | £2,500 | 19.3% | £482.50 | £435.00 |
NatWest Personal loan | £2,500 | 21.4% | £272.96 | £225.46 |
Smile Personal loan | £2,500 | 19.9% | £254.50 | £207.00 |
Santander Personal loan | £2,500 | 14.9% | £193.19 | £145.66 |
Source: Moneynet 23.08.2010
ENDS
Published: 23/08/2010
The information in this article was correct at the time of publication and contains time sensitive data and links, it may not be accurate at the time of reading.