A month ago, the answer to this question was yes.  In the past two weeks, however, this answer has changed.  Recent data and visitor feedback suggests that people who opt to transfer balances online may decrease their odds of getting approved.  Additionally, with many credit card companies, there is a pretty large financial incentive to wait until your credit card arrives in the mail before transferring balances.

We’ll start with the monetary reason.  Most credit card companies are now offering a 0% APR on balance transfers for up to 1 year.  The key phrase here is, “up to.”  American Express, Chase, and Citibank all offer tiered introductory offers.  Applicants with excellent credit will receive a 0% APR for a full year in most instances.  However, these credit cards may approve an applicant, but only grant a 0% APR for as little as 3 months.

Now, if you were to transfer your balance online to one of these credit cards and only get a 0% APR for 6 months, you’ll not only be paying interest 6 months sooner than you expected, you’ll also be paying a 3% fee.  This combination can wipe out much of the savings 0% balance transfers provide.

To avoid a scenario such as this, consider applying online and then transferring your balance when your credit card arrives in the mail and you can review the full details of your offer.  No credit card company provides upfront information on interest rates, 0% terms, or credit limits until they have reviewed your application.  Thus, the best option for consumers is to play it safe and wait.  If you end up with a credit card that only offers a 0% APR for 3 or 6 months, apply for another card from a different company to see if you get a better offer.

The second issue that had popped up this month is lower approval rates on applications submitted by visitors of Smart Balance Transfers.  This has been particularly apparent with the Discover More Card, the most popular offer on the site and one of the few remaining credit cards that actually delivers on a 0% APR for a full year to approved applicants.

While we do not know the exact reasons for this decline, one possibility could be the reluctance of lenders to accept applicants who desire balance transfers.  However, by simply applying online and calling in to transfer your balance, you may improve your odds of getting approved.

The important thing, however, is to be extremely careful about transferring balances online to credit cards that offer a 0% APR on balance transfers for up to 1 year.  Its much better to find out that your interest rate only lasts 6 months before you’ve paid balance transfer fees than it is afterwards.

For additional information and to compare 0% APR balance transfers, please visit the main section of Smart Balance Transfers.

News of credit card companies slicing the credit limits on consumer and small business credit cards has been in the news for quite some time.  However, a report yesterday discussed on CNBC and noted in today’s Wall Street Journal, an astonishing 60% of credit card companies are slashing consumer credit lines as a result of the continuing credit crunch.

Cutting credit limits on consumers creates a number of problems beside the obvious.  Here, I’ll do my best to describe the complicated effects lowered credit limits can have on credit scores, and thus the availability and cost of credit for everyone.

Let’s begin with the obvious.  Having your credit limit reduces your ability to spend.  Also, many people who have their credit limits cut are often sent an ultimatum from their credit card company:  close your credit card account and keep your current interest rate or keep it open and we’ll raise your interest rate.

Many people opt to do the second, and consequently, their credit report shows that they are using all of their available credit.  Even if you just have your credit limit cut from, for example, $10,000 to $5,000, this can negatively impact your credit score.

In the first scenario, where your account is closed, your credit score may be adversely effected because it will appear that you are “maxed out”.  In the second scenario, where a credit limit is cut in half, a balance of $4000 would now mean you are using 80% of your available credit.  These factors are strongly considered in not only your credit score, but in the way your credit report is viewed.

Having less available credit lowers your credit score, sometimes dramatically.  This, in turn, will make it harder to get a new credit card, to refinance your current credit card debt, or qualify for a good mortgage or car loan rate. 

Unfortunately for consumers, this raises the cost of borrowing money across the board.  However, there are a few remedies that, if taken quickly, can help ease the pain and prevent issues.  First, if you have money available, pay down your reduced limit credit card so that the balance is less than 50%.  And, even if you can do that, get a new credit card before the credit bureaus update your score.  This tactic is especially useful for people who cannot pay down their debt levels below 50% of the available credit balance.

Another option is to try to get a 0% balance transfer.  This will not only reduce your current interest costs, it can help you pay down your debt faster and help your credit score.

The impact of credit limit decreases are clearly troublesome.  And the repercussions can raise the cost of borrowing money across the board.  In these tough times, securing a 0% interest rate is becoming difficult, and if you don’t have one now, its better to act sooner rather than later.

For more information on 0% credit cards, please see the appropriate section in the credit card comparison section of our website.

Over the past year, we’ve seen no fee balance transfer offers disappear and balance transfer fees rise dramatically.  One of the remaining bright spots has been Discover, which had been limiting its balance transfer fees to the lesser of 3% or $75.  All of this will change on November 1st.

On this date, Discover will join the rest of the fee crazy credit card companies and remove the $75 balance transfer fee cap from all of its consumer offers, leaving a grand total of ZERO major credit card companies with caps on balance transfer fees.

The removal of the balance transfer fee cap will not effect everyone.  For example, if you are transferring a balance of less than $2500, you’ll pay less than $75.  And, if you are transferring multiple balances below $2500, your balance transfer fees will also remain the same.

The real victims of the industry wide hike in balance transfer fees will be consumers transferring large balances.  For example, a $10,000 balance transfer to any major credit card company will now cost $300 instead of $75.  While that is a 400% increase, its still a fraction of the $1200 that person might pay with a 12% interest rate.

While it is unfortunate that all the major credit cards are charging a full 3% on all balance transfers, I don’t think we should be complaining too much.  If the credit crunch (credit crisis?) start to get worse, we may not be able to get 0% balance transfers at all.  That would be a much greater problem than 3% fees.

For more information and to apply online for a balance transfer credit card while you still can, please see the 0% balance transfer section of Smart Balance Transfers.

Visitors to Smart Balance Transfers often write in wishing to know what cards offer high credit limits for balance transfers.  Unfortunately, the answer to this question is not very cut and dry.  In a nutshell, the best answer is:  it depends.  And, as the credit crunch has intensified, predicting which credit card will provide credit limits of $10,000 or $25,000 is even more difficult.

Here’s the main issue.  No credit card company can or will tell you what your credit limit will be until you have applied and they have processed your application.  It doesn’t matter what your credit score is, how high your income is, or what your favor color is.  Credit limits are determined based on proprietary, computer based risk models, and no one at any credit card company can even provide you an estimate as to what your credit limit will be.

The credit crunch has become yet another problem for people seeking high credit limits for balance transfers.  Credit card companies have become reluctant to extend credit to even the most credit worthy customers, and those with credit scores below 700 will have a hard time getting a respectable credit limit.

Taking these factors into consideration, there are still a number of options for consumers looking to transfer high balances from high interest credit cards to 0% APR credit cards.  The first option is to apply for a credit card issued by a company that offers high credit limits.  Below is a list of credit card companies that offer above average credit limits:

• Discover - Offers credit limits of up to $25,000
• Bank of America - Offers credit limits of up to $25,000
• Capital One - Offers credit limits of up to $20,000

While the three credit card companies listed above offer high limits, there is no guarantee that you will get a high enough credit limit to cover the balances you wish to transfer.  However, one option would be to apply for a credit card from two or more of these issuers.  While you may not get the credit limit you need from one company, your combined credit limit may be high enough to help you get all of your high interest balances onto 0% APR cards.

For more information, please see the 0% APR balance transfers section of Smart Balance Transfers where you can compare credit card details and apply online for approval.

I’ve been warning readers about potential problems in the balance transfer market for some time now (see http://www.smartbalancetransfers.com/blog/2008/09/0-balance-transfers-regulations/, http://www.smartbalancetransfers.com/blog/2008/08/is-it-getting-harder-to-get-a-0-apr-balance-transfer/ or http://www.smartbalancetransfers.com/blog/2008/10/credit-crunch-crunching-credit-cards/).  And it seems my “rantings” are becoming an unfortunate reality.  Major credit card issuers, including Chase, are reporting ever increasing credit card defaults.  The result of higher defaults is tighter approval standards.  And the consequence is that less and less people will qualify for 0% APR deals.

The Washington Post published an ominous article on the matter today.  Titled, “Banks Hoard Cash as Credit Card Defaults Rise,” the article highlights the issues facing credit card companies, and more importantly, consumers.  Greg McBride, a senior financial analyst at Bankrate, strikes a particularly disconcerting note, stating, “Even somebody with great credit is going to have an extremely difficult time getting a loan if they don’t have a down payment.”  While this blanket statement applies to all categories of loans, the message is clear:  credit will not be easy to acquire.

As nearly all major credit card companies have publicly acknowledged a tightening in credit standards, the question becomes:  how much more tightening will occur?  Clearly, the financial markets are still in the throes of the credit crunch.  And an end is not yet in sight.  Given this perilous situation, consumers need to act quickly if they want to take advantage of a 0% APR.  Otherwise, there may not be 0% offers available to all but the most credit worthy.

As I’ve said before, if you are currently carrying a balance on your credit card, refinancing with a 0% APR is an excellent way to not only save money on interest, but also pay down current debt.  Even if you don’t carry a balance, having a credit card that offers a 0% APR on purchases is a great insurance policy.  With the future of the economy uncertain, there is little time to wait.  Things will get worst for credit card issuers before they get better, and the unfortunate victims of this will be consumers.

For more information and to apply online for a 0% APR balance transfer or 0% APR credit card, please refer to the credit card comparison sections of SmartBalanceTransfers.com.  By taking a few minutes to apply for a 0% balance transfer today, you can realize substantial savings during the next year.  How much you can save will depend on how much debt you currently have.  The average household, which carries close to $9000 in debt, can realize interest savings of over $1000 by transferring balances from a credit card with a 12% interest rate.  In tough times like these, that’s a deal no one should ignore.

To find out exactly how much you can save, you can try our balance transfer calculator before applying online.