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# Balance Transfer Fee

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Posts: 3,118 Forumite
Ok, if I am transfering a balance from one card to another and the fee is 3% and the APR is going to be 5.8% is it right that i can rethink the APR as being 8.8%?

Simple stupid question i know....

• Posts: 4,156 Forumite
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A balance transfer fee is a one off fee for taking the debt to another card company.

For example, if you were transferring a balance of £1000 from HSBC to Barclays and Barclays BT fee was 3%, the total amount of debt you would owe Barclays is £1030.

BT fee's wont affect your APR, so what they state in the guide, for example 5.8% is what you'll pay annually on the total amount (eg. £1030)
• Posts: 482 Forumite
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Ok, if I am transfering a balance from one card to another and the fee is 3% and the APR is going to be 5.8% is it right that i can rethink the APR as being 8.8%?
Technically, the 5.8% isn't APR - it should be quoted as p.a. (per annum). APR includes normal fees and charges and the only APR quoted for the card will be the normal (non-promotional) amount.

If you want something equivalent to APR, I think you can do the following.
Take the inital balance, plus the transfer fee and work out the interest on it over the year, so for example, £100 transferred plus £3 fee, give £103 openning balance. At 5.8%, this is £108.97, so 8.97%. However, APR is complicated to calculate, so that may not be correct.

But if you're calculating it on the month-by-month basis, just add the fee to the openning balance.
• Posts: 7,112 Forumite
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The transfer fee, for some reason unknown to me, slips under the radar and does not change the APR.
The "Effective" rate of interest on your card should be slighltly more that 8.8% APR because the £3 is paid up front on day one and itself incurs interest at about 5.8%.
The APR of 5.8% is not the actual APR on your card in particular. Its is the APR for some particular balance on some virtual card that satifies tha Consumer Credit Act of 1974 as amended since.

The actual rate of interest, as opposed to the stated APR, can be calculated from the monthly rate charged. I will not work it out here lest I fall foul of CLIO for the second time in one day

Summary: Yes you are more or less right 8.8% is the total cost in year one.
...............................I have put my clock back....... Kcolc ym
• Posts: 3,345 Forumite
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Robert
cheers... btw sorry for saying you were a know it all. I should of said nowt.:)
• Posts: 4,866 Forumite
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Ok, if I am transfering a balance from one card to another and the fee is 3% and the APR is going to be 5.8% is it right that i can rethink the APR as being 8.8%?

Simple stupid question i know....

Only if the debt is for one year. Even then there will be rounding errors as you will pay 5.8% on the 3% if that makes sense...
• Posts: 7,112 Forumite
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clio wrote: »
Robert
cheers... btw sorry for saying you were a know it all. I should of said nowt.:)

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...............................I have put my clock back....... Kcolc ym
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