2% BT fee - these companies are quids in!

rde

I have an Abbey credit card.I recieved an offer from Abbey the other day for 0% on transfers and purchases until my January 2006 statement - with a 2% fee for BT. I do have another card where the promo rate is coming to an end, so I did initially think about doing a BT but decided to use my abbey card as my main card for purchases, to prevent the BT fee.

However, Abbey is still quids in because they charge the retailers for card transactions. This can vary between 1 & 2.5%.

So by giving me this offer which seems to be very good, they are still making big bucks from me.

Clever eh?

Robert_Sterling_3

Abbey is a business.
Businesses work, within the law, to make a profit.

rde

Robert_Sterling wrote:

Abbey is a business.
Businesses work, within the law, to make a profit.

I appreciate that. What I am trying to say, but not doing a particularly good job of it, is that when these companies are offering us a BT with a 2% fee, they are making as much or even more money than if we just used our card normally.

We, as consumers, thing BTs are good things, but when we have to pay for them, the card company makes even more money from us!

BenL

They make even more money when people do a BT and then use the same card for purchases due to the way they allocate repayments.

Keep your cards seperate.

Ben

Rafter

3 months at 0% for a fee of 2% works out at about 8.25% APR, still less than an overdraft or bank loan for such a short period.

Say the bank can borrow money at 4.75% and you borrow £2,500 like this.

They make a grand total gross profit of £22 over 3 months. Out of this they have to process the transfer, run computer systems, pay fraud costs and write off bad debt for the 5%+ of customers who never pay back their debts each year.

As for normal payments on a credit card in retailers, the bank gets about 1% in fees from the retailer on average. The retailer sometimes pays more, but this is to cover the cost of equipment and processing costs and the bank that issues your card gets 1%

1% hardly covers the cost of issuing statements, offering interest free credit, covering fraud costs, running computer systems etc, which is why the banks are so keen on you actually borrowing on the card and why they are withdrawing cashback and benefits or even trying to introduce fees for full payers (MBNA).

R.

Robert_Sterling_3

Astute stoozers are estimated to have a total of over £1,000,000,000 owing at 0% per annum.
Astute Credit Card Companies are getting a bit of there own back by using BT fees.
To the winner the spoils.

Thefunkygibbons

The reality is that Abbey are getting the interchange fee which is about 1%, the rest goes to the credit card acquirer, so they are better off charging a BT fee

MarkyMarkD

Robert_Sterling wrote:

Astute stoozers are estimated to have a total of over £1,000,000,000 owing at 0% per annum.
Astute Credit Card Companies are getting a bit of there own back by using BT fees.
To the winner the spoils.

Their I do believe, RS1. Your spelling is normally rather better than this!

Robert_Sterling_3

You are right it is but there there don't get too excited.

MarkyMarkD

Calm down, it's only a commercial.

Swiss_Toni

For new customers only. New customers only. New..