Dodgy Trick by Egg on Balance Transfers

pconnelly

Just found a crafty ploy by Egg that's hidden in the T&C's with regards to balance transfers...Which is that they charge full rate interest on the balance transfer fee, which is a fairly high maximum of £50.... :eek: Interest on the £50 fee i was charged was 54p in the first month!

And...since you pay off the balance transfer first, before you start paying the fee and fee interest off, this will accumulate quite quickly...

The_Boss

So useless for stoozing I guess.

Milarky

That would be about 5 months times 54p for speicial promotions at present but after 1st May - with such fees uncapped - that would add another 0.159% to the 2.5% fee over five months. That makes it about 2.66%. Given repayments are 2% anyway - so average oustanding balance is about 96% - that makes it about 2.77% to borrow from Egg. To covert that into an interest rate equivalent - allowing for it being only a fraction of a year - raise '2.77%' to the power of 2.4 (12/5 ths) and its about '6.78% pa'. [Without the charging on the fee, as you point out, it would be a bit lower at '6.36% pa']

For nine months (introductory) the fee, interest thereon, the longer period of borrowing allowed with slightly lower average outstanding balance - means that even at '0%' the effective interest rate is about '4.06% pa'. This is still good if you are managing debt for a short period but even there life of balance cards start to look better. For stoozing its quite impractical - except to be used as a mule for other 0% interest card offers ex-sp months.