As this is probably your first visit to the Balance Transfer Blog, you may think this story about the end of 0% interest balance transfers is alarmist. However, during the past year, this humble writer has unfortunately been the proverbial canary in the coal mine when it comes to balance transfers.
Last summer, I predicted the decline of no fee balance transfers. This prediction came to fruition in a matter of weeks. Early last fall, I predicted that most companies would cease offering fixed APR balance transfers. These offers are now gone.
Recently, I have been writing (ranting?) about the end of 0% interest rates that last for 1 year. And, in the coming weeks, more than a few of the remaining good credit card companies will be reducing introductory rates from 1 year to around 6 months. Additionally, some companies, including Bank of America, will be raising balance transfer fees to 4%.
Ultimately, the recently passed Credit Cardholder’s Bill of Rights will dramatically impact the availability of 0% interest rates, if not eliminate them altogether. For consumers with good credit who have been utilizing 0% balance transfers to pay down credit card debt without incurring massive interest charges, this will pose a huge problem.
To put the end of 0% balance transfers in context, I like to refer back to early 2000’s. Back then, a typical balance transfer deal offered a 3%-5% introductory rate for six to nine months. During the credit boom, the length of 0% balance transfers ballooned, with some companies offering 0% rates for up to 15 months. However, now that the credit boom has become a bust, it is quite reasonable to assume that 0% rates will either last for less time or will be replaced with 3% or 5% APRs.
The end of 0% interest rates for 1 year is near. If you have a mailbox, you’ve probably noticed these offers are no longer arriving daily or even weekly. And if you go online to find a new credit card, you’ve probably noticed there are less offers available. Consequently, if you are in a position to capitalize on a 0% APR balance transfer, act now while these offers still last for 1 year. If you don’t, you will soon reap the benefits of the new credit card laws: higher interest rates and less opportunities to refinance credit card debt at reasonable prices.
For additional information on current 0% interest balance transfers, please use the navigation on the left to compare offers in the credit card comparison section of Smart Balance Transfers.
June 15th, 2009 at 11:34 pm
With our fiscal situation right now, I think the 0% will still continue. More and more people like the this idea and really patronizes financial companies who offer this.
June 16th, 2009 at 12:00 pm
Perhaps in the short term and only for individuals with excellent credit. 0% credit card offers have been declining significantly in duration as credit score requirements have been rising. So, even if 0% credit cards continue to be available, a larger portion of the credit card using population will be shut out from these credit card deals.