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.

American Express targets their credit cards to big spending consumers.  However, over the past few years, American Express has offered a great deal on fixed APR for life balance transfers with many of their credit cards.  However, as we reported last month, American Express is no longer offering fixed APR for life balance transfers.  In fact, most American Express cards are not offering low rates on balance transfers at all anymore.

While some cards are offering no fee balance transfers, these cards still carry interest rates in the high teens and, since there are a lot of credit card companies offering 0% APR balance transfers, these are not the best deals.  With 0% balance transfers available, there’s little reason to save a few dollars and then pay hundreds more interest. 

For more information on American Express balance transfers, please see their respective section in the credit card comparison section of this website.  For more information on 0% APR balance transfers, please refer to that section.

Okay.  Its time to pull out your credit card statement and take a look at your monthly interest expense.  What you find might not be pleasant.  We plugged some numbers into our balance transfer calculator to estimate the monthly cost of carrying a balance on a credit card with a standard interest rate.  The results weren’t pretty.  Check out these monthly and annualized expenses for people with $3000, $5000, and $10,000 in credit card debt.

We’ll start with $3000 in debt on a credit card with a 14% interest rate.  Every month, this card racks up $35 in interest.  While this may not seem outrageous, over the course of a year, the total interest expense nears $450.  And that assumes the debt doesn’t go up.

Things start getting uglier when we increase the debt level to $5000.  On a monthly basis, the interest expense crosses the $50 threshold, coming in at $58.  While this isn’t ideal, the yearly cost is really striking:  $746!.  And $5000 is only about half of the average household credit card debtload.

Now, let’s look at the costs of $10,000 in debt.  On a monthly basis, interest expenses cross into triple digits, coming in at just over $100.  What’s frightening, however, is the yearly cost.  It totals over $1,400.  No matter who you ask, that’s a lot of money.  And, its money that doesn’t have to be spent.

Although the credit crunch has made it more difficult for some consumers to get accepted for 0% balance transfers, it is still possible to get approved for one of these money saving deals.  Unfortunately, however, the credit crunch may worsen, and the availability of these offers may dry up quickly.  For those reasons, not to mention the fact you can save a few hundred or thousand dollars, the time to transfer balances to a 0% credit card is now.

You can review these offers in the balance transfers section of this website and apply online.  You can also continue reading for some real nightmare balance transfer scenarios.

Nightmare #1:  $10,000 in credit card debt with a 17% interest rate

• Monthly Interest Expense:  $142
• Yearly Interest Expense:  $1839

Nightmare #2:  $15,000 in credit card debt with a 15% interest rate

• Monthly Interest Expense:  $188
• Yearly Interest Expense:  $2411

Nightmare #3:  $20,000 in credit card debt with a 15% interest rate

• Monthly Interest Expense:  $250
• Yearly Interest Expense:  $3215

These scenarios are not uncommon across America, and with high interest rate credit cards, debt can quickly spiral out of control.  With an interest rate of 14%, debt can double in as little as 3 years.  And, as we all know, its much easier to get into credit card debt than it is to get out.

Our advice is simple:  don’t let your credit card debt get out of control.  Consolidate high interest credit card debt onto a 0% APR balance transfer credit card and pay down your debt before its too late.

Although credit card companies have been making it more difficult for consumers to gain access to new credit cards and reducing the quality of 0% offers all year long, the credit card market has help up surprising well.  Until now.  David Reilly of the Wall Street Journal eloquently described the present situation for credit card card issuers as the, “worst of time and the worst of times.”

Why?  Credit card issuers are being hit with a Perfect Storm.  Both Bank of America (BAC) and Citi (C) announced rising credit card delinquencies in the past few days.  This, of course, cuts into their profits.  However, this shouldn’t have been a surprise to anyone.  What makes this situation particularly dire is the freeze up in commercial lending.  The credit card companies are being forced to pay significantly more to borrow the money they lend to consumers, cutting deeply into their profits. 

Without a sharp and immediate decrease in the cost of borrowing money for banks, consumers can expect to see higher interest rates and the quick elimination of 0% APR offers.  If the credit crunch continues to worsen, the concept of a 0% APR may soon be little more than a memory.

Smart Balance Transfers has been sounding the alarm for quite a while now.  Consumers paying double digit interest rates on their credit card debt may want to start listening.  If you don’t lock in a 0% APR now, you may not be able to find one soon.

To learn more about available 0% APR credit cards, please see the credit card offer section of this website.

The proposed Credit CardHolders’ Bill of Rights (see http://maloney.house.gov/index.php?option=content&task=view&id=1569&Itemid=61) is supposed to help consumers.  And in many ways, it would.  Unfortunately, like most legislation, it couldn’t come at a worse time.  As the credit crunch intensifies, this consumer friendly bill may backfire, drying up available credit to those who need it most.

According to the bill, the Credit CardHolders’ Bill of Rights would do the following:

• Protect cardholders against arbitrary interest rate increases
• Prevent cardholders who pay on time from being unfairly penalized 
• Protect cardholders from due date gimmicks
• Shield cardholders from misleading terms 
• Empower cardholders to set limits on their credit
• Require card companies to fairly credit and allocate payments 
• Prohibit card companies from imposing excessive fees on cardholders
• Prevent card companies from giving subprime credit cards to people who can’t afford them
• Require Congress to provide better oversight of the credit card industry
• Contain NO rate caps, fee setting, or price controls

Now, its hard to argue with the benefits many of these goals would provide to consumers.  Unfortunately, many of these proposed changes, if enacted into law, would fundamentally change the way credit card companies do business.

For example, interfering with the fees credit card companies impose on consumers who pay late or go over their credit limits would alter credit card risk management.  The people who are getting charged these fees are failing to use their credit wisely.  Unfortunately, responsible credit users will pay the price for the irresponsible credit management of others.  This price may be a reduction in 0% offers, higher interest rates, and a return to annual fees.

Another major sticking point is protecting cardholders against arbitrary interest rate increases.  Here, the definition of arbitrary is the point of interest.  Many credit card companies utilize a wide range of data on consumers, such as their credit scores and recent credit history, to determine the interest rates they charge.  When a consumer’s credit score drops or credit report changes, credit card companies “reprice” the consumer’s interest rate to control risk.  Without the ability to reprice debt from consumers that become risky, credit card companies will again rob Peter to pay Paul.  And, in this case, Peter is the consumer that pays his bills on time.

While the Credit CardHolders’ Bill of Rights is not expected to become law this year, many believe it will pass early next year.  In the interim, credit card companies may be bracing themselves by limiting the availability of credit to otherwise worthy consumers and making it harder to get 0% interest rates.

The next few months will be interesting in the credit card world.  And consumers should be prepared.  If you don’t have a 0% credit card in your pocket today, you may not be able to get one two or three months from now, regardless of how good your credit is. 

This website was designed to help consumers save money with 0% interest rates.  In the coming months, that may be a difficult mission.  However, until this bill passes, its a good time to take advantage of the 0% deals available. 

For more information, you can compare 0% APR credit cards and apply online at our main site.