"Handling fee"

The_Boss

What is the exact definition of a handling fee, such as one for a balance transfer?

There is a reason for this, believe me.

Robert_Sterling

I believe you.

The_Boss

Ok, here's my thinking.

£25 over the limit charges are ruled as disproportionate by the OFT as it only costs the bank about £10 to process all the stuff etc etc etc

So why is a handling fee on a balance transfer 2% flat. Surely it costs them the same to out the transaction through for a £1000 BT as it does for one for £4000. Therefore, isnt this charge also out of proportion?

EagerLearner

Egg want 2.5% BT fee - even more out of proportion!

EagerLearner

King_Of_Fools

But could the BT fee not also be viewed as a fee to purchase the fixed 0% product for the timeframe. Therefore, it could be argued that a proportional fee is obviously correct as it costs the bank more to lend a larger amount.

Andy_L

A BT fee is not a penalty charge for breach of contract & thus unaffected by the rulings on the unenforcability of disproportionate penalty charges.

Andy

The_Boss

Andy_L wrote:

A BT fee is not a penalty charge for breach of contract & thus unaffected by the rulings on the unenforcability of disproportionate penalty charges.

Andy

but if they are ruling that the fee is disproprtionate, then you can argue in this case it is the same.

As for the fee being a lending fee - you are not charged this percentage when you purchase stuff, so why should you be on balance transfers?

YorkshireBoy

The_Boss wrote:

...you are not charged this percentage when you purchase stuff...

Check the bottom of your supermarket receipt - you'll see that you 'agree' to pay xyz services 2.5% of the transaction amount (and only 97.5% to the retailer).

Also, travel agents and car dealers charge a percentage fee - but this time it's added to the transaction amount, not included in it.

The_Boss

YorkshireBoy wrote:

Check the bottom of your supermarket receipt - you'll see that you 'agree' to pay xyz services 2.5% of the transaction amount (and only 97.5% to the retailer).

Also, travel agents and car dealers charge a percentage fee - but this time it's added to the transaction amount, not included in it.

I have always wondered about this, as it is clearly displayed on tills in HMV.

Does this mean HMV are losing out if someone pays by card instead of cash or do the credit card company foot this 2.5%?

King_Of_Fools

The_Boss wrote:

I have always wondered about this, as it is clearly displayed on tills in HMV.

Does this mean HMV are losing out if someone pays by card instead of cash or do the credit card company foot this 2.5%?

Yes HMV have to pay a proportional fee to the credit card company (probably less than 2.5%) that they would not have to pay if you used cash.

However, HMV also have to pay the bank to deposit cash, securicor to come and collect it, etc. so they may not be any worse off!

YorkshireBoy

The_Boss wrote:

I have always wondered about this, as it is clearly displayed on tills in HMV.

Does this mean HMV are losing out if someone pays by card instead of cash or do the credit card company foot this 2.5%?

I'm sure they'll factor the merchants fee into the price of the goods, and the additional profit from those paying cash will cover the additional business expenses of processing this cash, ie Securicor, banking etc.

I believe there's also a VAT benefit from showing this 2.5% 'fee' on your receipt.