Balance Transfer Fees - Should They Be Legal

ManAtHome

Can see the point, but woudn't expect the FSA to think about it until we've had a couple of months-worth of BT fees rip-off! headlines (not that I think it's a rip-off, just that the FSA tend to operate on the stable door bolt principle).

Are mortgage arrangement fees included in any stated APR?

YorkshireBoy

ManAtHome wrote: »

Are mortgage arrangement fees included in any stated APR?

I'm not a mortgage expert, but don't they use something called "total cost for comparison*"? Also, in their illustrations I believe they give a lifetime APR equivalent, based on you staying with them for 25 years. Since no-one ever does, it's largely meaningless.


* The credit card equivalent being "total charge for credit", which is based on a rigid set of assumptions.

PBA

ManAtHome wrote: »

Are mortgage arrangement fees included in any stated APR?

Yes, all the set up & repayment fees are included in the APR on a mortgage keyfacts. However the APR on these is largely irrelevant as it assumes you'd keep paying the standard variable rate for the rest of the mortgage once the 2 year deal came to an end.

Chris2000

A few of my existing cards keep offering short-term 0% offers with a BT fee, but don't mention the equivalent APR which would be much higher. The rules for calculating APR on a credit card are now quite prescriptive so I'm sure if they are not quoting an APR in offers to existing customers, or are quoting the APR for purchases only, it's because the rules allow it.

Nevertheless, it does annoy me when Morgan Stanley offer me 5.9%pa for 5 months with a 3% fee. That is equivalent to an interest rate of about 13%pa with no fee. I would like to see the rules changed so that cynical offers like this, which deliberately obscure the true cost, are not allowed without quoting the equivalent APR. However, as the rules were updated just a few years ago it's unlikely they will be changed again in the near future.