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my apologies if something like this has been previously posted....

You know the ole' game: You receive an "offer" in the mail or from a CS rep to transfer a balance at a "low" rate of x%. And hey, it's so good that they'll only charge you a fee ONCE of, say, 3%.

So anyway, I'm on the phone with my good friend Trish at 1stUSA ( where customers always come first ) and she gives me the pitch- 5 months, 3.9%apr, 3%fee.

Now right off, I can figure in my head that this is actually about 10 or 11%. However, just for amusement, I stay on with her:

"So", I says, "it's really more like 10 or 11% including the fee, right?". "No, the fee is only a one time charge....", she says. "I meant including the fee," I say, " the a.p.r. is actually around 10 or 11." ......"No, your a.p.r. is 3.9%...."

And round and round and round she went, spinning endlessly in a circle of 3 and 3.9 percents ( I don't think she was getting dizzy, because she had obviously ridden this merry-go-round several times before ). So, having had my fun, I thanked her and politely said good-bye.

Like I said above, the real rate isn't too hard to figure out in your head. Just take the number of months the offer lasts and divide 12 by that number ( 3mos.- 12/5= 2.4 ). Multiply this by the fee ( 3%*2.4= 7.2) and add that to the "a.p.r." ( 7.2 + 3.9 = 11.1 ) for the real rate. It's pretty easy once you do it a few times ( and easier when the number of months divides into 12 evenly- 3,4, or 6 ). Or you can make a little spreadsheet that can crunch the numbers for you if you want ( just so you can tease those c.s. reps with the actual numbers when you call ) :

cell A:amount to transfer ( or any number other than zero), say 1000.
cell B: a.p.r of the "offer" (3.9% in ex. above)
cell C: duration in mos. of "offer". ( 5 )
cell D: %fee charged ( 3% )
cell E: \$amt. of fee [ A x D ] = \$30
cell F: approx. amt of interest [ A x [[B/100]/12] x C ] = \$16.25
cell G: total of fee/interest [ E + F ] = \$46.25
cell H: REAL a.p.r. [[[12/C] x G] / A ] x 100 = 11.1

I think I have that right...

Or, use the super-easy method: Avoid most any balance transfer offer charging a fee.

So, my 3.9% "offer" was actually 11.1%. Not too good, but at least it was better than one I received from Providian ( pronounced "provide-for-them" ) just the other day: 7.99%(!) until Feb.2000(!!!) (!)... super stupendous. Now since Providian charges a measly 4% fee for their Instant Kash checks, the rate of this amazing,stupendous offer is 31.99% ( I gave them the benefit of the doubt and assumed two whole months of "Savings" )

And So, I hereby present Providian with my personal "Sleazeball CC co. of the Month" award for Dec. 1999

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