0% Balance Transfer Periods Grow Shorter

For the past six years, consumers seeking 0% balance transfer credit cards could generally expect a fast approval process and a 0% rate for 12 months, if not a 0% APR for 15 months. Others were able to take advantage of fixed APR balance transfers, often at rates as low as 2.99%. Unfortunately, the days of long 0% rates and fixed APR for life balance transfers have come to a sudden end. Today, most credit card companies only offer 0% rates for 6 months and no major credit card company is currently offering fixed APR for life deals.

What Happened to 0% Balance Transfers?: The short answer is everything. Credit card companies, under pressure from new credit card laws as well as record credit card defaults are losing money hand over fist. In the past, credit card operation were hugely profitable. But with nearly 10% of all accounts delinquent and new laws set to change the way credit card companies do business, generous 0% offers are no longer a necessary or profitable way to draw in new business. As many of you may have learned the hard way, many credit card companies don’t even want their current customers, let alone new ones that aren’t paying any interest.

In a nutshell, credit card companies were hit by the proverbial Perfect Storm. And consumers will continue to pay the price.

Current 0% Balance Transfer Offers: At present, most credit card companies are only offering zero percent balance transfers for 6 months, with the best companies only charging a 3% balance transfer fee. Many other companies have increased balance transfer fees to as much as 5%. Despite these fee increases, the length of balance transfer offers continues to decline and consumers are finding it more and more difficult to get approved for deals they would have ignored just a few months ago.

Fortunately, it is likely that 0% for 1 year balance transfers will return in the near future. However, no balance transfer fee deals will probably be gone forever.

What to look for in a balance transfer credit card today: Now that 0% rates have been shortened, the search for a balance transfer credit card should be about more than the 0% interest rate. Given the behavior of many of the largest credit card companies, choosing a good credit card company should be considered as important as the 0% deal. Perhaps most importantly, however, is getting a good interest rate when the 0% period expires. Even if your new rate is only 3% less than your current rate, you can save about $30 a year for every $1,000 you have in credit card debt.

Final Thoughts: As the quality of credit card offers continues to deteriorate, consumers need to grab 0% rates from good credit card companies while these still exist. A few months ago, getting a 0% APR on balance transfers for a full year was a simple ten minute process. Today, getting a 0% rate for 6 months is growing increasingly difficult. This is a trend that is likely to continue, so taking action today remains the best option for consumers who need to escape high interest rates.

For more information on current offers, you can compare 0% APR balance transfer credit cards here.

Originally Published 15 January 2010