Unfortunately, a number of my dire predictions have been coming true recently. Eight months ago, I wrote that no fee balance transfers would become a thing of the past. Today, getting a 0% APR for 1 year on a credit card that charges no fees on balance transfers is a distant memory.
About the same time, I warned that balance transfer fees would rise. At that time, most companies were charging a 3% fee with a $75 maximum. A few weeks later, companies began lifting the $75 maximum, raising the cost on balance transfers in excess of $2500 dramatically. For example, a person who did a $5,000 balance transfer with a straight 3% fee would have paid $150, or double the previous maximum fee.
Recently, Bank of America announced that they will raise balance transfer fees to 4% on June 1st (my comments on this credit card fee increase appeared in a recent article on the Christian Science Monitor. Clearly, the direction of balance transfer fees is up.
Just as we’ve been on the money about many balance transfer fee issues, we’ve also been fairly accurate with regard to fixed APR and 0% APR offerings as well. Fortunately, it is still possible to get a 0% APR for 12 months on balance transfers. However, the number of these offers has decreased significantly and it is very likely that in a few months, the average 0% rate on balance transfers will be 6 months and still carry a 3% fee.
While I don’t want to be alarmist, I think anybody who stands to benefit from a 0% balance transfer, which is almost everybody, needs to act soon so they can lock in a 0% APR for a full year. Otherwise, getting out of credit card debt will become significantly more difficult.
Now, I truly hope to be wrong on this prediction, but failing to take advantage of a balance transfer now may prove a costly bet against my prediction in the long run.
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