: How to arrive at the fee-adjusted APR (accounting for balance transfer fee, but not inflation)? I'm trying to figure out the fee-adjusted interest rate paid when incurring a balance transfer fee on a loan, not accounting

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I've never done a balance transfer but I don't think you'll end up owing less immediately after the transfer. If you're transferring ,000, and the transfer fee is 2% (0), you'd either send them a check for 0 to transfer the ,000, or you'd end up with a balance of ,100 immediately after the transfer. It wouldn't be ,900.

Your effective rate will also depend on how you pay off the loan. If you pay off just the minimum amount each time it's due, and then pay off the rest at the end of the 200 days (or 365 days) then you'll pay more than if you throw a big chunk at the balance at the beginning.

Let's say that you amortize this over 12 months, and make 12 equal payments. Using this calculator, with a balance of ,100 and an interest rate of 4%, you'd make twelve payments of 4.26 (plus or minus) and pay 1.12 in interest. Add this to the 0 fee, and your effective rate is about 4.1%. Now, if you make twelve payments of 2 (2% of the initial balance), and pay off the balance (a little over 00) in the 12th month, you'll pay almost twice as much interest (8.63) and your effective APR will be almost 6%.