A few months ago, there were no new credit card laws, no massive interest rate increases and literally hundreds of 0% balance transfer credit card offers with low fees.  Today, credit card companies are struggling with the impending implementation of new credit card regulations and massive unemployment.  Their response:  raise interest rates on credit-worthy consumers and put an end to money saving balance transfer deals.

Back in March, just about every major credit card company offered 0% balance transfers lasting one year and charged a maximum balance transfer fee of 3%.  Today, most balance transfer offers only last 6 months, and some include hefty 5% balance transfer fees.

Why the change?  For starters, credit card companies (and their divisions in major banks) are bleeding money.  This is a result of high unemployment and the liberal granting of credit that has been going on for the past half decade which has led to record numbers of defaults.  However, the introduction of new credit card laws has added fuel to this fire, creating a perfect storm of sorts. 

Basically, credit card companies are unable to make money today because of economic conditions and they are unsure of how they will make money when the new credit card laws take effect, as these laws essentially change the entire business model.  Given these two factors, the first line of defense credit card companies have is to raise interest rates (while they still can) and cut back on lucrative 0% deals (which they have done).

Despite the lower quality and shorter durations of balance transfer offers, credit card companies are making it increasingly difficult for consumers with good and even very good credit to get approved for balance transfer credit cards.  With so much uncertainty in the market, the companies would rather wait until the economy improves then take the risk of lending money to oftentimes worthy customers.

Although 0% balance transfer deals are not quite what they used to be, they are still one of the easiest ways to save money, as they can sharply reduce interest expenses, even if only for a short period.  However, selecting a balance transfer credit card today is about more than just the 0% APR.  People who’ve had their interest rates raised into the 20% range can save substantially in the long term if their new balance transfer credit card offers a long term interest rate that is lower-and most credit cards will.

Ultimately, if you can benefit from a lower interest rate (and who can’t) getting a new balance transfer credit card as soon as possible should be a top priority.  If current trends continue, there may not be 0% balance transfer deals available in the coming months, and getting approved for the offers that are available may prove more difficult then it is today.

For more information on current offers, please visit the credit card comparison section of Smart Balance Transfers.

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