How can a bank say 0% APR on balance transfers and yet charge a transfer fee?
Doesn’t the very definition of "annual percentage rate" mean that it has to include fees? Isn’t that the whole point of the concept APR, as opposed to mere "interest rate"?
But look:
http://www.businessdictionary.com/definition/annual-percentage-rate-APR.html
http://www.investorwords.com/242/APR.html
APR includes fees! But clawed raised a good point, no term, no way to calculate it. But still, they are misleading. They should say 0% interest.
I agree with you… the way you look at it, that is. They’ve been pulling this for years, and should never have been allowed to get away with it.
I guess one reason for doing it, though, is that (in the case of a loan without a fixed term such as a credit card balance transfer) it is impossible to factor the fee in over any particular length of time since we don’t know the length of the term of the loan.
the 0% apr is the interest earned on the balance. doesnt mean there cant be a fee to transfer the balance over to the new bank.
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I agree with you… the way you look at it, that is. They’ve been pulling this for years, and should never have been allowed to get away with it.
I guess one reason for doing it, though, is that (in the case of a loan without a fixed term such as a credit card balance transfer) it is impossible to factor the fee in over any particular length of time since we don’t know the length of the term of the loan.
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APR and transfer fee are two completely different things. The transfer fee is a one time charge for processing the transfer. The APR is the annual interest rate charged on the account.
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So how are they supposed to make money? No, the annual percentage rate doesn’t include fees, sorry.
How they really make money is when you use the balance transfer and also use the credit card to make purchases. Then your purchases don’t get paid off until the balance transfer is, and they rack up fees!
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