Credit Card Fees

pinkkaz

This was in the Metro today. I liked the bit at the end particularly!

£240m cost of 'interest free' card offers

Monday, July 30, 2007

Banks made £240million in 'transfer fees' from credit cards offering zero per cent interest rates in Britain last year.

Many who switched card companies to save money on their interest payments were unaware they would be charged up to three per cent of the balance for making the change.

That means someone moving a £5,000 debt had to pay £150, while a £3,000 transfer cost £90.




The Office of Fair Trading is considering a probe into the fees – just days after it launched a High Court action against banks on the issue of overdraft charges. Zero per cent balance transfer deals have been widely used by savvy consumers – or 'rate tarts' as the banks call them – to manage their debts.

There are almost 150 cards which do not charge interest, but almost all now charge a fee for making the transfer.

Of the few cards with no fee, including Norwich and Peterborough Building Society, and Britannia Building Society, the deal is for members only.

The fees became widespread last year as banks and building societies sought a new source of income after the OFT cracked down on penalty fees.
More than £239million was paid in transfer fees in the year to the end of June, according to MoneyExpert.com.

Almost 12million people have switched credit cards in the past year, with an average fee of £19.99.

A spokesman for the British Bankers' Association said the fees covered the transfer of direct debits and checking credit history. However, why this charge would be higher for those transferring bigger sums was not clear.

jonesMUFCforever

Those who switch pay - those who don't won't.
Simple really.

I myself have recently transferred the cost of our holiday to 0% until end of January 2008 and was charged £31 as a balance transfer fee. This is far cheaper than paying overdraft interest or applying for a loan.
Can't see the problem really.

As for those who claim that they were never told about balance transfer fees - should they be allowed to have a card if incapable of reading??

mikiex

I don't see a problem, 2% transfer fee then 12 months free.
Thats 2% apr, less if the fee is capped - find a loan at that rate,
banks are losing money more like

mrsplinter

The problem I have with these fees is that it makes it difficult to compare different deals. Like whether 3.9% for six months is more expensive then 0% for six months with a 2.75% fee (I'm slow at maths). Also I notice that BT fees don't just come with 0% interest, but also higher interest amounts. For the sake of clarity I think they should be got rid of.

jonesMUFCforever

mrsplinter wrote: »

The problem I have with these fees is that it makes it difficult to compare different deals. Like whether 3.9% for six months is more expensive then 0% for six months with a 2.75% fee (I'm slow at maths). Also I notice that BT fees don't just come with 0% interest, but also higher interest amounts. For the sake of clarity I think they should be got rid of.

So because you can't work it out, the majority of us who can, should suffer?

mrsplinter

So because you can't work it out, the majority of us who can, should suffer?

I'm sorry I don't understand how the abolition of fees would harm the majority. I thought their introduction to the market was generally considered a negative development for the consumer. Martin himself talks of the sad onset of balance transfer fees in the related article. I doubt very much the majority are able to compare varying interest rates and fees since, according to the metro article, many don't even realise they are charged a fee.

jonesMUFCforever

If you abolish the fees you won't get any free interest period!
Times have changed even compared with 18 months ago when fees started to become commonplace.

The cost of 'borrowing' money to give you an interest free loan has increased from 4 to 5.75% nearly 50%.

Sorry but if anyone cannot read the terms and conditions of anything they deserve everything they get!

peawack

I was offered 0% until Jan , without a fee, this very day !

From Egg card

jonesMUFCforever

peawack wrote: »

I was offered 0% until Jan , without a fee, this very day !

From Egg card

I got this as well.

I think you need to read the e-mail again as mine states a balance transfer fee of 2.5%.

peawack

ejones999 wrote: »

I got this as well.

I think you need to read the e-mail again as mine states a balance transfer fee of 2.5%.

I didn't get an e-mail. I rang them , and it (0%) ,was offered to me.

jonesMUFCforever

peawack wrote: »

I didn't get an e-mail. I rang them , and it (0%) ,was offered to me.

In that case look very carefully at your next statement!