Consumers looking to save money with 0% balance transfers are likely to find it significantly more difficult to gain approval today than at any other time in recent history.  According to a Federal Reserve survey of senior loan officers, more than 60% of banks are tightening lending standards.  Two years ago, the number of banks doing so was less than 10%.  During the past decade, with a brief exception during 2000-2002, 10% or less was the average.  (Even during the 2000-2002 period, only about 20% of senior loan officers reported tightening of credit standards.)

The tightening of lending standards effects everyone, but is particularly troublesome for people looking to take control of their finances via the use of tools like 0% interest balance transfers.  With banks unwilling to lend, consumers will find themselves fighting high interest rates as they attempt to pay down credit card debt.  For the majority of this decade, this was not an issue, as banks were giving 0% interest rates to household pets.

If anything positive can be gleaned from this report, its that there isn’t much more room for credit tightening.  However, the second bailout and perhaps pressure from the government to get credit flowing may ease this situation.  In the meantime, consumers should be vigilantly working to reduce debt, and thus monthly interest expenses.  And, for those who can get approved, transferring balances to a 0% credit card is still the way to go.  Hopefully, this option will be available to more consumers in the coming weeks or months.

Over the past year, but especially in the past few months, credit card companies have been tightening credit requirements.  This tightening of the belt is profoundly effecting the ability of people who need credit to obtain it.  However, it is also hurting consumers seeking to save money with 0% balance transfers.

A year ago, it was possible to get a 0% APR for a full year on purchases and balance transfers while paying no balance transfer fees.  Today, that is an impossibility.  Major credit card companies have not only pulled no fee balance transfer deals, but increased the fees associated with balance transfers.

For example, the standard balance transfer fee in February of 2008 was 3% with a maximum of $75 per transfer.  With this pricing model, a person with a $5,000 balance on a single credit card would pay $75 for a balance transfer.  Today, that same balance transfer would rack up $150 in fees.

Unfortunately, paying balance transfer fees is now a necessity.  Nevertheless, these fees are a drop in the bucket compared to what can be saved with a 0% APR for a year.  What should be of concern to consumers is the future availability of 0% rates.

During the credit boom years, credit card companies battled each other to gain new customers.  A key weapon in that battle was the 0% interest rate.  Now, however, credit card companies are not particularly interested in taking on new customers.  And as the competition between lenders declines, so should the availability of 0% rates.

Fortunately, it is still possible to get a 0% APR for a full year on purchases and balance transfers (for more information, see these 0 balance transfer offers).  Many banks, however, are only granting these rates to customers with very high credit scores.  Those with good credit scores and high debt levels may find it hard to get approved.  And people with average credit are being shut out of the 0% marketplace.

Hopefully, the economy will improve soon and credit card companies will stop their belt tightening.  However, if things continue on their current path, getting a 0 balance transfer for a year may become extremely difficult.