My wife got an unusual offer from Bank of America in the mail yesterday for a WorldPoints Platinum Plus MasterCard. Instead of a typical 0% balance transfer offer, this credit card offered a 0% APR or a 2.99% APR on balance transfers, depending on a review of her credit. The offer, which came with a 4% balance transfer fee, would not be bad if it were for a 0% balance transfer. Unfortunately, she would not know if her balance transfer interest rate was 0% or 2.99% until after she applied.
Given the 4% balance transfer fee, this was either a decent offer or a relatively poor one. If she were to get the 2.99% balance transfer rate, she would effectively be charge 6.99% for the balance transfer. Other companies that offer 0% rates for a year and charge 5% fees are clearly a better deal, as this would save her about $100 on a $5,000 balance transfer.
This balance transfer offer, with its tiered structure, essentially leaves applicants in the dark about what credit card terms they will actually get. And, unfortunately, it looks like this is the future of balance transfer offers. Credit card companies have been cutting back on balance transfers since late 2008, and the new credit card laws are causing them to test new pricing strategies, with higher fees and the possible end of 0% rates ahead.
If you are a recipient of a 0% or 2.99% offer, you may want to consider checking your credit report before submitting an application. If you have a credit score above 750, you stand a much better chance of getting a 0% APR for 12 months instead of a 2.99% APR. However, if you do not have excellent credit, your best bet may be to apply for a credit card that offers a 0% rate to all approved applicants. This way, you know you are getting the rate you desire.
To learn more about current 0% balance transfer credit cards, please use the navigation on your left to compare offers and apply online.
Editor’s Note: The one positive thing about this credit card offer is the fact that it shows credit card companies are starting to mail out deals. I remember getting new offers from Bank of America multiple times a week two years ago. Today, its become rare to see any offers at all. Perhaps credit card companies are starting to lend again, albeit at much higher rates than many of us have become accustomed too.
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- November 2011 Report on Balance Transfer Credit Cards
- Maximizing the Savings Potential of Balance Transfer Offers
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