In the summer of 2008, it was possible for consumers with good credit – not great, just good – to get a 0% APR on no fee balance transfers for around 6 months or get a 0% APR balance transfer for 1 year with a 3% fee capped at $75. Today, such is not the case. Credit limit decreases as well as other factors have dented otherwise very good credit scores, sometimes substantially. And balance transfer fees, as well as interest rates, are increasing dramatically.
Today, a credit card that charges a 3% balance transfer fee is a good deal. With Bank of America and Chase raising their balance transfer fees to 4% and 5% respectively, it is only a matter of time before other banks follow suit. Unfortunately, credit card companies are not only raising balance transfer fees, but also decreasing the length of 0% APR balance transfer deals. A year ago, most companies offered 0% rates for a full year. Today, getting a 0% APR for 6 months is an accomplishment.
Because 0% introductory periods are growing shorter while fees rise, consumers looking to take advantage of balance transfer credit cards need to look at more than just the 0% rate when choosing a credit card for balance transfers. During the past five years, it was very, very easy to move your balances from one 0% card to another. With new laws due to take effect and increasing amounts of consumers failing to stay current on their debt, credit card companies have become significantly less generous with 0% deals.
Ultimately, consumers now need to look at both the 0% rate and the go-to or long term interest rate before they elect to transfer balances. Unfortunately, credit card companies generally do not provide applicants with information on their long term interest rate until after an application has been reviewed. Consequently, consumers applying for balance transfer credit cards should wait until the card they apply for arrives in the mail to initiate the balance transfer process. This not only gives them a chance to see the long term rate, but also may improve the chances of getting approved, as credit card companies may be electing to not approve applicants who intend to use their credit cards for balance transfers.
You can read more about why you should not transfer credit card balances online or review current 0% APR balance transfer credit cards on our website.
