0% APR deals and "handling fees"

TRT wrote: »

I understand that. The issue I have is the way they misdescribe what the fee is. Either it's related to the credit or it's related to the processing. They are not going to double handle the amount by setting up two six month periods for the 12 month deal.

It is clearly related to processing because they have called it a processing fee. If you want to consider it interest masked as something else fill your boots - but it isn't.

There is no obligation on the provider to charge you the same fee on different deals - mortgage companies don't.

I understand where you are coming from, TRT. The fee seems to be described as a Handling Fee (from what you have written) rather than a processing fee and 'handling' the transfer of the balance is the same whether the promotional interest rate lasts for one year or ten years.

However, and this may be semantics, the term 'Handling Fee' isn't actually described anywhere in the terms of the offer (I imagine) so it would be easy to defend their position by saying the fee covers the cost of 'handling' the transfer and 'handling' the cost of that borrowing whilst you pay no interest.

Handling the cost of your borrowing at 0% for a longer period costs the bank more, so they charge you more.

Like I say, semantics, and others may suggest covering the cost of borrowing could not reasonably be described as 'handling', but there you go. At the end of the day (as others have said) they can make you an offer (or two or more) and put whatever terms they like in those offers. If those terms don't suit you, you don't have to accept the offers.

Edit - my reasoning may fall down, however, if you took out a BT under Offer #1 with the 4% fee and then paid it back in the shorter period covered by Offer #2 with the 2% fee. I wonder if they'd offer to repay half of the handling fee if you did that?! - No, I don't think so either.

To be fair to the OP, I had a similar email yesterday from them and it does state that it is a handling fee.

Dear Hazzanet

Great news. We wanted to let you know you have new balance and money transfer rates available on your Virgin Money Credit Card ending 0000.

Plus, you can now make balance and money transfers using our new credit card app.

Find out more

Balance transfer Transfer a new balance from another card
Option 1
0% interest until August 2020 statement
4% handling fee applies
Option 2
0% interest until January 2020 statement
2% handling fee applies
Money transfer Transfer money into your bank account
Option 3
0% interest until August 2020 statement
4% handling fee applies
Option 4
0% interest until January 2020 statement
2% handling fee applies

Either way, it's how balance/money transfers work in the 0% space, and while the OP's point is, in my opinion, technically correct, the fee associated with balance/money transfers has always been the opportunity cost of the interest lost for providing a 0% deal, however you dress it up. Let's face it, we're arguing semantics.

chattychappy wrote: »

I agree with the OP entirely.

The whole point is that we have a system whereby CCs must quote APRs to give an idea as to the true cost of borrowing. CCs with an annual fee must roll this into the calculation even though such fees are generally not related to spend. (They have to assume an assume an arbitrary level of spending to produce a totally useless APR.) So why isn't this rule applied to BT deals?

The concept of the (handling) fee is a nonsense - it is nothing to do with handling. As the OP observes - it varies with the amount of credit taken and duration. Truly it is a form of charge for finance - ie interest under a different name.

I agree with the "take it or leave it brigade", but that's not the point. It is about CCs not sticking to the spirit of regulation and a regulator that seems unwilling to close a loophole. The whole point of APRs - a mechanism by which consumers can understand the real cost of credit - is subverted.

Yes but is the APR legislation any use you typically get something like

Representative example:
If you spend £1,200 at a purchase rate of 21.9% (variable) p.a. your representative APR is 21.9% APR (variable)

which tells you absolutely nothing. How would they standardise the fee in terms of BT? For the first year as its APR or for the length of the BT rate.