Balance Transfer Calculation

[oracles]

sorry guys but my brain is alittle warped right now LOL

If you can help me out with this calculation.

If i have a balance transfer offer for 0% for 15 months with a balance transfer fee of 4%, am i pretty much paying 3.25% on the balance over the life of the offer?

I think that is correct but please correct me if i am wrong

thanks

[Anonymous]

Yes, that is approximately correct assuming you let it ride until the last month.   

Since you are prepaying the whole amount in the beginning, if you pay it off evenly or quickly, it works out to more. 

[Anonymous]

EDITED: For understanding the question wrong

[Cleanmachine]

4% divided by 15 months equals  .02666 percent

[Anonymous]

---

@Cleanmachine wrote:

4% divided by 15 months equals  .02666 percent

---

Wrong, it is 0.266 %     That is the monthly rate not the yearly rate.

[oracles]

you guys just made me more confused lol

I am just trying to figure out the apr cuz even though it 0% for 15 months, there is a 4% blance fee, so what is the true apr?

[cashnocredit]

---

@oracles wrote:

sorry guys but my brain is alittle warped right now LOL

If you can help me out with this calculation.

If i have a balance transfer offer for 0% for 15 months with a balance transfer fee of 4%, am i pretty much paying 3.25% on the balance over the life of the offer?

I think that is correct but please correct me if i am wrong

thanks

---

Yes, roughly. It might be a tad higher since you have to make monthly payments. These apply directly to the reducing principal effectively increasing your APR since the average amount borrowed is lower than the initial amount but the transfer fee is based on the initial amount. Might be around .5% or so. If you provide details of the required monthly payment on the BT I can work it out exactly.

BTW, congrats on asking about the real APR on this deal. It's the right way to look at money.

[oracles]

thanks cash for your response.

 I was jus tapproved for the card and got the balance transfer offer today.

 I am thinking about using 25k for a balance transfer and that will will come out to be 1000 dollars for 15 months.

 I wouldnt know the monthly payments until i get my first bill or until i actually do the balance transfer and then ask afterwards what would be my monthly payment due.

 I also assume that the monthly due may vary as time goes on, but again that is just a guess.

Thanks again for all your help guys

[marty56]

LOL now I am confused.

A 25k BT over 15 months would be $1667 a month so it will be PIF by the term date.  Most CCCs won't set the monthy payment so it will be PIF by the term date and will lower the monthly payment as the balance goes down in an effort to insure that you don't PIF by the due date. 

IMHO in most cases BT's make sense if you use them to PIF higher rate CCCs, as long as you don;t run up the balances again or can make more money in an investment then the higher interest rate CCs are costing you.

[Cleanmachine]

Wolf3

Try again.

The offer is for 15 months not 12

I should have indicated the fee would be 4% divided by 15 months equals 00.0266 percent for the 15 months.

marty56, is correct if you pay the balance in equal installments for the 15 months.

Remember, the FEE is not considered in the ARP. It is separate.

Your fee will be deducted from you first payment.

Your monthly statement will reflect a certain percentage of the balance.

Depending on your Credit Card policy your monthly payment would be anywhere from

1% of balance or as high as 5% of balance.