In the most general sense, banks are still approving credit card applications.  However, the FICO score requirements being imposed by many banks is leaving a large number of consumers in the lurch.  On our website, we’ve seen application approval rates for balance transfer credit cards drop dramatically over the past three months.  In some instances, approval rates appear to be as much as 75% lower than they were back in May.

While consumers applying for credit cards are met with unpleasant denials, consumers with active credit card accounts are being met with complete disdain.  Despite the fact that the Prime Rate – which is used to determine credit card rates – is many percentage points lower than it was a year ago, many banks are continuing to dramatically raise rates on existing customers.

Rate squeezes are leading consumers to seek out new cards with lower interest rates.  Unfortunately, few credit card companies are interested in taking on the new business, especially via balance transfers.  And this trend is worsening, despite the return to profitability by many banks.

Unfortunately, tighter credit card approval standards are likely here to stay.  With new credit card laws due to take effect in February of 2010, banks are literally scrambling to find ways to profit from the credit card business.  This was never a problem before, as this type of lending was a huge profit creator for banks.  However, the new credit card laws will change the way credit card companies due business in significant ways, and it appears as if the banks have yet to figure out how they will profit under the new restrictions.

In addition to burden of new regulations, record high defaults and continually rising unemployment pose signicant risks to existing loans, which is why many credit card companies are jacking up rates and slashing credit lines.  It is also why consumers who have very good and even excellent credit are getting denied for new credit cards.

Hopefully, a slowdown in unemployment and credit card defaults will entice credit card companies to lend again.  But in the meantime, consumers stuck with high interest credit card balances that are unable to get approved for balance transfer credit cards should focus on paying down their debt as quickly as possible to avoid massive interest expense and to improve their credit scores so their credit utilization ratios make them appear less of a risk to other credit card companies.

Want bad news?  Open mail from your credit card company or search online for a balance transfer credit card.  Along with increased balance transfer fees, many credit card companies have been sharply decreasing the duration of 0% balance transfer offers during the past two months.  Here is a roundup of current offers from some of the largest banks as of July 24th, 2009: Continue Reading »

UPDATE:  Please see Citibank Interest Rate Increase Solutions for detailed information on the most recent rate increase.

A few weeks ago, I wrote an article about Citibank raising credit card interest rateson a small number of store issued credit cards.  At the time, Citi had been generating very few negative comments from readers and it appeared as if Citi was shaping up to be one of the best behaved credit card companies.  I was proved very wrong, as CitiBank has substantially raised interest rates on an apparently large base of customers to as much as 29.99%. Continue Reading »

As I’ve been reporting for the past seven months, credit card companies are growing increasingly unwilling to offer 0% balance transfers to even the most creditworthy consumers.  Despite the fact that many people need balance transfers more than they ever have in the past, the combination of the credit crunch and new credit card legislation have spelled nothing but bad news for balance transfers.

Yesterday, during their second quarter earnings call, JP Morgan Chase discussed various ways in which the new credit card laws will impact they way they do business.  And one area mentioned was a move away from not only 0%, but all low rate balance transfer deals. Continue Reading »

Although much as changed in the balance transfer market over the past twelve months, a number of credit card companies continued to offer 0% balance transfers for 1 year.  However, the new credit card laws, designed to help consumers, can count 0% balance transfers for 1 year as their newest victim, as more and more credit card companies stop offering 0% rates lasting more than 6 months. Continue Reading »

I received an email today that sickened me.  A visitor interested in purchasing a timeshare was being told to use a 9 month 2.9% introductory rate credit card to pay for the $17,000 bill and then utilize 0% balance transfers for five years to pay off the bill and escape interest.  I was very please to have an opportunity to help this visitor avoid what could easily have turned into a financial nightmare.

During the past five years, it was entirely possible to use 0% balance transfers year after year to defer interest (and hopefully pay down debt).  However, this is not the case today.  Not only is it getting tougher to get approved for a 0% balance transfer credit card, it is also getting increasingly difficult to get a 0% APR for more than 6 months.  To make matters worse, just about every company has raised the maximum balance transfer fee and many have increase the fee to 4 or 5% of the transaction. Continue Reading »

While I’ve only heard a couple complaints from consumers who called to opt out of their credit card contract before a rate increase, enough people have written in to concern me.  At first, I thought perhaps the customers had made mistakes.  But given the current behavior of credit card companies, I’m inclined to believe visitors that take the time to share their stories at Smart Balance Transfers.

A visitor posted a story about an opt out that his credit card company failed to recognize, which is re-posted below.  However, given both the behavior of credit card companies and the huge potential for miscommunication with foreign based representatives, I strongly advise all consumers who choose to opt out of their credit card instead of accepting a rate increase to do the following: Continue Reading »