Cash Transfer fees

Pat38493

If I am offered to take out 10K in cash for 12 months, for a 5% fee, does the fee represent the interest rate, or is the effective interest rate higher.

e.g. if the 500 is added to the 10K, my balance is 10.5K so that is 5% fee.

However if what they mean is that I will only get 9.5K and £500 will be taken for the fee, then the effective interest rate is 5.26%?

Either way, it seems to be not that bad compared to current loan or overdraft rates, as long as you can definitely pay the money back after 1 year?

Martico

The first - you'd have 10K put into your bank account and your card debt would total 10,500. Assuming that's a money transfer offer from a credit card

Martico

(Depending on circumstance) there are better rates for MTs at the moment. I've got a live one for 3.9% over 18 months from Barclaycard at the moment, so shop around if you're able to

Brie

I assume this is a 0% interest deal?  In which case you also need to ensure you can at least pay the minimum (2% of the balance or similar?) each month or you get switched from 0% interest to maybe 26%.  And then pay the entire remaining balance at the end of the period when it all switches to 26% (or whatever).

It's always suggested that you set up a DD payment for the minimum at the very least to help you avoid problems.   

eskbanker

Pat38493 said:

If I am offered to take out 10K in cash for 12 months, for a 5% fee, does the fee represent the interest rate, or is the effective interest rate higher.

No, the fee is different from the interest rate, and both will be charged (if applicable), so you'll need to read the offer terms more carefully to establish what it is....

Pat38493

eskbanker said:

Pat38493 said:

If I am offered to take out 10K in cash for 12 months, for a 5% fee, does the fee represent the interest rate, or is the effective interest rate higher.

No, the fee is different from the interest rate, and both will be charged (if applicable), so you'll need to read the offer terms more carefully to establish what it is....

The interest rate was 0% - it's the fee I am asking about.

eskbanker

Pat38493 said:

eskbanker said:

Pat38493 said:

If I am offered to take out 10K in cash for 12 months, for a 5% fee, does the fee represent the interest rate, or is the effective interest rate higher.

No, the fee is different from the interest rate, and both will be charged (if applicable), so you'll need to read the offer terms more carefully to establish what it is....

The interest rate was 0% - it's the fee I am asking about.

In which case I'm baffled by what you meant by "does the fee represent the interest rate, or is the effective interest rate higher", but do the above posts answer what you were getting at?

Pat38493

eskbanker said:

Pat38493 said:

eskbanker said:

Pat38493 said:

If I am offered to take out 10K in cash for 12 months, for a 5% fee, does the fee represent the interest rate, or is the effective interest rate higher.

No, the fee is different from the interest rate, and both will be charged (if applicable), so you'll need to read the offer terms more carefully to establish what it is....

The interest rate was 0% - it's the fee I am asking about.

In which case I'm baffled by what you meant by "does the fee represent the interest rate, or is the effective interest rate higher", but do the above posts answer what you were getting at?

Yes - I thought they might be trying to pull a fast one by including the transfer fee in the headline total so that the fee would actually be more than 5% of the net amount I received in my bank - my fear was unfounded according to the first reply.