Balance Transfer Fees - Should They Be Legal

Gordon861

I've been seeing all these adverts offering 0% on balance transfers etc but then charging a percentage to transfer the funds over.

Now if the 0% interest is only valid for 12 months surely this means that they are in effect charging you interest through the % transfer fee.

I thought that the APR is supposed to take into account ALL costs over the year not just the basic interest. Isn't APR supposed to be the 'real' cost ?

Using basic numbers :
If I loan you £1000 at 0% interest for 12 months, but charge you 10% for the pleasure surely that means I'm charging you £100 or 10% interest really ?

Shouldn't these fees be made illegal or at least added to the APR rate to produce a real figure ?

Or should the ASA be looking at them for false advertising ?

Could you go back and attempt to reclaim these fees as being unfair, as they claim to be 0% but aren't really ?

BTW - I don't have one of these cards and have never had one, this is just a general question.

_Andy_

Nothing illegal or dodgy about them. I appreciate your point however why would a CC company offer 'true' 0%, i.e. they're there to make money.

Nothing is forcing borrowers to accept BT fees, the CC company is just ensuring they make some money from the agreement.

exel1966

The fee was brought in to stop the consumer taking advantage of these 0% offers by transferring monies to these companies whilst on 0% deals and then moving on when the offer expired.
It was costing the companies time and money to process applications/administer cards for these people (like me) and get absolutely nothing out of it. I took (and still do to some extent take) full advantage and use the system to make me money as a number of people here also do.

You have to remember that BT fees are relatively new in the scheme of cards. They've probably only been with us for 2-3 years now. Previously we had a number of years without them. There are still half a dozen cards available that DO NOT charge BT fees.

There's absolutely nothing illegal or wrong with these charges. They are a business and every business has the right to make money. They've certainley made me a few quid !!!

Gordon861

I don't deny the right for these companies to charge the fee, and make money.

Perhaps the thread title is badly chosen.

What I argue should be illegal is advertising them as 0% APR.

From the FSA website (http://www.moneymadeclear.fsa.gov.uk/products_explained/what_is_apr.html)

What is APR?
APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR includes important factors such as:

• the interest rate you must pay;
• how you repay the loan; the length of the loan agreement (or term); frequency and timing of instalment payments; and amount of each payment;
• certain fees associated with the loan; and
• premiums for payment protection insurance that the lender chooses to make compulsory.

All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around.

Therefore these CC companies should be advertising the real APR of their cards including this transfer fee. I thought all loan and CC companies had to include APR calculated the same way now.

CLAPTON

Just been looking at the offer that came through the post this morning.

0% Interest Until October 2008 - a 2.5% FEE APPLIES..........

however No mention of APR anywhere

exel1966

The real APR is *% as they advertise. The BT fee has nothing to do with the APR. You don't have to have use the BT facility and providing you don't you won't be charged a penny. It's made crystal clear !
If you do you'll be charged a fee for the service, totally seperate from the APR.
I fail to see your argument behind this.

Gordon861

CLAPTON wrote: »

Just been looking at the offer that came through the post this morning.

0% Interest Until October 2008 - a 2.5% FEE APPLIES..........

however No mention of APR anywhere

If the % they are quoting isn't APR there probably is an ASA case there then.

Weren't there a number of cases in recent years where companies hid the APR and ended up in court over it ?

Gordon861

exel1966 wrote: »

The real APR is *% as they advertise. The BT fee has nothing to do with the APR. You don't have to have use the BT facility and providing you don't you won't be charged a penny. It's made crystal clear !
If you do you'll be charged a fee for the service, totally seperate from the APR.
I fail to see your argument behind this.

In that case what does 'certain fees associated with the loan;' on the FSA website refer to ?

Surely these fees should be included in the APR, as they would be if it was a mortage setup/transfer fee.

The fact that CLAPTON's paperwork makes no mention of APR and doesn't claim it's 0% APR does seem to indicate that they also feel they can't claim it's 0% ARP.

exel1966

It's no good asking here for that. You'll need to ask the FSA as that's the ONLY place you'll get a full, correct and concise answer. You'll probably get a few interpretations here as I'm sure they'll be some ambiguity within the FSA's statements, but that's not what you're asking for . Maybe they only apply to loans, rather than cards ?

CLAPTON

just looked at the following websites with 0% offers... none of them claim its 0% APR

Barclaycard
Nationwide
HSBC
A&L
Cap 1

Gordon861

Yes I notice that they make a point of only quoting an APR after the interest free period.

They seem to avoid putting an APR for the interest free period as they would probably have to include the transfer fee in that figure, or they have been told that they MAY have to and no one wants to be the first to get hassle for miss-quoting the figures.