0% balance transfer offers provide credit card users the opportunity to shift debt from high interest credit cards to ones with low introductory rates for up to 12 months. Unfortunately, credit card companies are increasingly placing a very important, yet easy to overlook asterisks next to 12 months. Because of this fine print trickery, a 0% for 12 months* may actually be a 0% for 6 months.
When applying for any credit card, it is extremely important to examine the fine print. The new credit card laws slated to take effect later this month may have given some the sense that fine print trickery was going to end. It is not; in some ways, it is likely to get worse. Such is the case with 0% balance transfer offers.
Three of the six largest credit card companies currently advertise 0% rates on balance transfer for either up to 10 months* or up to 12 months*. However, each of these three companies places an asterisk next to the deal. Why? In the fine print, these offers state that applicants who meet their highest standards will get a 0% APR for the longest advertised rate. Everyone else who gets approved will get a shorter 0% rate of 6 or 7 months.
The difference between getting a 0% APR for 6 months as opposed to 12 months is substantial, especially with balance transfer fees running between 3-5%. With a 0% for 12 months, a person who transfers a $5000 balance from a credit card with a 15% interest rate will save close to $500 in interest. And this includes a 5% balance transfer fee. If the length of the 0% period is reduced to 6 months, the savings are minimal unless the balance is paid off before the 0% rate expires.
Because so many credit card companies offer 0% rates for up to 12 months and reserve the right to only grant approved applicants a 0% rate for 6 months, some consumers may have little choice but to apply for one of these offers if they seek a 0% APR. If you fall into this category, wait until your card arrives in the mail before initiating a balance transfer. This way, you can see how long your 0% for 12 months really lasts.
-Jeffrey Weber
February 8th, 2010 at 10:20 am
For more information on balance transfer offers, please see the 0% balance transfer section of this website, where you can compare current credit card offers and apply online.