Unfortunately, starting on March 1st, Discover is no longer offering a 0% APR on purchases for an entire year.  The new 0% term is now 6 months.  While most Discover cards, and most offers from Discover, only offered a 6 month APR on purchases, we were one of the few lucky sites able to get our visitors a 0% APR for an entire year on purchases and balance transfers.

While this change in duration is unfortunate, consumers looking for 0% balance transfers can breathe a sigh of relief, as Discover will continue to offer a 0% APR for a full year on balance transfers to approved applicants.

For more information on Discover credit cards, please see the Discover balance transfer page on our website.

Should you read an older blog entry stating there is a 0% for a full year on purchases, please ignore this.  As always, check and double check the terms and conditions of any credit card you apply for.  While we strive to maintain the most accurate information, discrepancies do occasionally occur.

In response to numerous inquiries from visitors, we recently added an article on How Balance Transfers Affect Credit Scores to the main section of our website.

In this article, I examine a few scenarios in which doing a balance transfer actually improves a person’s credit score as well as a few major pitfalls to avoid.

Ultimately, whether you are applying for a credit card to earn rewards, get a 0% intro rate or do a balance transfer, there will probably be a change in your credit score.  Unfortunately, however, it is difficult to truly present a complete answer to questions like, “Will applying for a credit card hurt my credit score?”  For some people, applying for a credit card and consolidating balances can actually improve credit scores.  However, this is not the case for everyone.

Because predicting the effect applying for a credit card can have on any person’s credit score, we recommend using a free credit monitoring service that offers a credit score analyzer.  With this tool, you can test various scenarios to determine roughly how your credit score will be effected.

Again, these tools are not perfect, but neither is the confusing credit score system.

For more detailed information on how balance transfers effect credit scores, please see the complete article.

For additional information on websites that offer access to free credit scores and credit score analysis tools, please see the free credit reports section of this website.

Apparently, a low fixed APR for life isn’t entirely as low, fixed or long lasting as the description may lead one to believe.  Recently, Chase has been adding $10 monthly service charges to credit card accounts with low interest rates and large balances that are more than two years old.

This new fee, which is added to the higher, variable APR, is only the beginning.  More strikingly, Chase has raised the monthly minimum payment on many cardholders with low rates from 2% to 5%.  This move, much more so than the $10 fees, can mean the difference between keeping current with monthly payments and falling behind.  In fact, it is downright cruel to many creditworthy people struggling to get out of debt the honest way.

Just how dramatic this increase in monthly payments is best exemplified by a person with a $10,000 balance.  At 2%, the monthly payment on the card is a reasonable $200.  However, when that payment is bumbed to 5%, the payment balloons to $500 a month.  For many, that $300 monthly increase could be the difference between getting by and giving up.

In the short run, Chase risks pushing honest, hardworking Americans who would never consider defaulting on their payments into a corner.  In the long run, Chase risks chasing away credit worthy customers and damaging their brand.  Who would want a Chase credit card if they were aware that Chase clearly reserves the right to push customers to the brink?

In an article from smartmoney.com used a source for this article, http://www.smartmoney.com/Spending/Deals/Card-Issuers-What-Will-It-Take-to-Make-You-Go-Away/?afl=yahoo, one consumer hit by the Chase rate increase had a credit score of 800 and was only using 30% of his available credit.  He had signed up for a 3.99% fixed APR for life, looking to take advantage of a competitive rate and his account was not in arrears.  Nevertheless, Chase more than doubled this person’s repayment rate.  Perhaps their “models” showed that the customer could afford to repay them.  However, “models” are the reason we’re stuck in this credit mess.

In a footnote to the SmartMoney article, a Chase spokesman asserts that the changes affect fewer the 0.5% of its customers.  While that may be a small percentage, a large bank with Chase that has millions of customers could essentially be pulling this devious trick on tens of thousands of consumers.  Sure, it may only be 0.5%.  But the people affected aren’t percentages.  They are people trying to get through the toughest economic landscape of their lifetimes.  And instead of sending out a life raft, Chase seems to be pushing them underwater.

Note:  We’ve recieved tons of mail and posts from visitors who have had similar experiences with Chase and other companies.  We thank those who’ve shared with us and invite anyone who has had a bad credit card experience to post (or VENT) your anger and frustration here.  The more information available to consumers, the more we can help each other through this turmoil.

In one of the oddest moves in the ongoing saga of Credit Card Issuers Gone Wild,  American Express  has unveiled a plan to pay cardholders a $300 gift card to close their credit card accounts.   For consumers fortunate (or unfortunate) enough to get this offer, there are a number of rather important factors to consider before accepting or declining this offer.  However, there are also a few situations where consumers could actually gain by getting the Ax from Amex.  Here’s how:

1.)  Do a 0% Balance Transfer:  If you are currently paying an interest rate of 10% or more, you could save a few hundred dollars a year with a balance transfer credit card.  For example, if you carry a $5000 balance on a credit card with a 13% interest rate, you would could save close to $700 on interest over the course of a year with a 0% APR balance transfer, plus a $300 giftcard from American Express.  This would essentially put another $1000 in your pocket.

However, this option does have some risks.  For example, closing your American Express card could hurt your credit score, especially if this is one of the credit cards you have had the longest.  In some cases, the effect on your credit score might make the difference between getting approved for a 0% balance transfer credit card or not getting approved.

Consequently, if you plan to capitalize on the Amex Ax, apply for a 0% balance transfer credit card before closing your account.  This may also help limit the damage of closing your Amex account, as you will replace some of the credit line you would have lost.

2.)  Use Excess Savings to Pay off Your Debt:  Okay, not too many of us have extra savings lying around, but if you do, you’ll earn a better return on your cash than you might in a savings account.  If, for example, you have a $5,000 balance and opt to close your account, you’ll earn a 6% return on that money, plus save whatever interest expense you might have incurred.

However, as with the balance transfer strategy, the effect closing your credit card account will have on your credit score could be substantial.  Thus, even if you choose to pay off your credit card, you may be able to limit the damage to your credit score by opening a new credit card account.  Plus, this will also provide you with a credit line for emergencies.

3.)  Be Thankful American Express is Kind:  During the past six months, Chase, Bank of America, and many other credit card issuers have been closing consumer accounts and raising interest rates on consumers who choose to keep their accounts open.  Most credit card issuers have been approaching consumers with, “offers they can’t refuse.”  For example, some banks gave consumers this ultimatum:  close your account or pay a 30% higher interest rate.  There were no gift card offers there.

4.)  Prepare for Future Credit Card Turmoil:  Even if you didn’t personally get the Ax from Amex, the $300 gift card bribe highlights the growing struggles of the credit card issuers.  While things will get better, there is little evidence that this will happen anytime soon.  Thus, if you are carrying large balances on high interest credit cards or increasing your monthly debt, be prepared to get an offer from your credit card company.  And don’t be surprised if they are not offering you a $300 gift card.

Over the course of 2008 and early 2009, American Express has significantly altered its balance transfer rates.  Until September of 2008, American Express offered a number of credit cards that offered fixed APR balance transfers for life.  The interest rate?  For some cards, as low as 4.99%.  This was one the best options available to consumers looking to pay down credit card debt without utilizing a second, third or seventh mortgage.

When the financial markets went haywire last fall, American Express stopped offering fixed APR for life balance transfers and began offering 2.99% balance transfers for 12 months.  This move was a sharp departure from its rivals, most of whom continued (and hopefully with continue to) offer 0% APR balance transfers for 1 year.

For information on current American Express balance transfer offers, please see the appropriate section of this website.

While every individuals situation is different, we often receive questions from consumers that are strikingly similar.  Below is an actual email we recently received and our advice on how best to deal with the situation.

Question:  I am needing to transfer my balance of about $3000.00 and have questions on all my card options..for Citibank and American Express and Discover I hope some can answer my four questions ….
Here are my needs and what I am looking for …Thank you so much !
 
1.no fee for balance 
2.no annual fee
3.low A.P.R.
4.one year no interest

Answer:  Right now, as a result of the credit crunch, all the major credit card companies not only stopped offering no fee balance transfers with a 0% APR for a full year.  This happened last March, and it is now necessary to pay balance transfer fees in order to get a 0% APR for a full year.
 
That said, your total fees for a $3,000 balance transfer will be about $90.  However, if you currently have a 15% interest rate, you will save about $360 after fees if you can get approved.
 
For no annual fee and no interest for 1 year, I suggest you consider the Discover More card (see www.smartbalancetransfers.com to learn more and apply).  With this card, we have a special promotion that provides a 0% APR on purchases and balance transfers for a full year.  After that year, your interest rate can be as low as 10.99%.
 
The Citi Platinum card, even though it offers a 0% APR for up to 1 year and an APR as low as 8.74% is not the best deal because they offer tiered rates.  For example, people with superior 800 credit scores may get the 0% APR for a full year.  However, most people may only get the 0% rate for 6 or 9 months.  This is a little trick hidden in the fine print.
 
I hope this is helpful and please feel free to contact me should you have any further questions.  Should you choose to apply, please do so from www.smartbalancetransfers.com

If you have a question, please feel free to contact us.  We are happy to assist our visitors in any way we can.

In J.D. Power’s annual ranking of credit card companies, Capital One has historically lagged behind the pack.  In fact, Capital One came in second to last amongst major credit card issuers in 2008 (and 2007), garnering two out of a possible five stars in every category (see 2008 J.D. Power Rankings for complete details).

As part of the research process for Smart Balance Transfers, I personally test many credit card issuers by applying online for one of their credit cards.  Generally, these tests go well.  Such was not the case with Capital One.  In fact, my test of Capital One’s customer service turned into an aggravating three week process.  Today, after yet another frustrating encounter with Capital One’s customer service department, I put my “No Hassle” card in the shredder.  Below is a step by step recounting of my Capital One customer service experience:

1.)  Applying Online:  The online application process was the only easy part of getting a Capital One credit card.  From start to finish, the credit card application took about five minutes.

2.)  Activating the Card:  About ten days after applying, my card arrived in the mail.  I called up the activation number and had my first experience with Capital One’s customer service department.  It was not a good one.  Customer service, as far as I understand it, exists to serve and assist customers.  At Capital One, confusion and aggravation seems to be the M.O.  The representative I spoke with sounded like she was talking through a broken walkie talkie.  I couldn’t understand her and repeatedly had to ask her to repeat what she had just said.  Apparently, her phone line wasn’t very clear as well.  I had to repeat myself, well, repeatedly.

There were two big problems with this customer service experience.  First, the telephone connection was horrible.  More importantly, however, the representative, clearly located in an overseas call center, spoke poor English and understood English even less.  A call that should have taken three minutes took close to ten.

Ultimately, I activated my card, but got off the phone frustrated.  At this point, Capital One was about to fail my, “Mom test.”  The “Mom test” is pretty straightforward.  If I think a credit card company provides competent customer service that my Mom would have no issues with, they pass.  If I think a credit card company would confuse, complicate, or frustrate my Mom, they fail.  Capital One was on the brink.

3.)  Using the Card:  I made a small purchase online after activating my Capital One card.  Fortunately, I did not leave the house with only this card in my wallet or try to use it soon after, because a week later I got a letter in the mail stating that my card was on hold due to potentially fraudulent activity.  The letter stated that I needed to send in a copy of my driver’s license, social security card and a utility bill.

Annoyed, I spent the better part of an hour trying to locate my social security card.  Ultimately, I gave up and called them.  Again, customer service sounded like they were on the other end of a cup with a string attached.  And again, when I could hear the customer service agent, I couldn’t really understand her English.  This call to Capital One customer service lasted about ten minutes, involved two agents who spoke poor English, and ultimately ended up with my issue resolved.  However, had I needed to use my card, I would have been unable to for close to ten days. 

The communication issues, coupled with the fact that activating my card ultimately took three weeks, has led me, like J.D. Power, to give Capital One a big thumbs down on customer satisfaction.  Not only would I not recommend this credit card company to my mother, I wouldn’t even recommend it to a third cousin I didn’t particularly like.

If you have had similar experiences (or positive ones), please take a moment to share your thoughts by posting a comment.  Your feedback helps Smart Balance Transfers provide consumers like you with the information they need to avoid credit card hassles (pun intended!)