In the months leading up to the recent implementation of the new credit card rules, credit card companies significantly reduced the length of 0% interest balance transfer offers. Many companies that had previously offered 0% interest rates for a year reduced the average length to about 6 months, while most companies increased balance transfer fees to as much as 5%. During the next few months, it is likely that credit card companies will be experimenting with balance transfer offers as they try to figure out how to make profits while still offering long term 0% rates.
At present, many major credit card companies are offering 0% interest rates for up to 12 months on balance transfers. However, with some of these offers, only people with the best credit profiles actually get 0% rates for a full 12 months. The remainder fall into the “up to 12 months” category, which can mean getting a 0% interest rate for as little as 6 months, thanks to some fine print trickery. (My personal choice for the best balance transfer credit card offers a 0% for a full 12 months.)
Balance transfer fees are currently ranging from 3 to 5 percent, though 5% is becoming more common than 3% lately– the card I consider to be the best presently charges a 4% fee–and these fees are likely to remain the same, if not rise to 5%, as consumers stuck with high interest credit card debt have little choice if they wish to save money on interest.
While predicting the future of balance transfer offers can be a fruitless task, key trends have been in place for over a year. Those trends point to shorter 0% interest periods and sustained high fees. The days of no fee balance transfers are long gone and, should the economy continue to falter, 0% interest rates may be replaced with 3% introductory interest rates. For the time being, however, getting a 0% interest rate on balance transfers for a full year is still possible. Hopefully, the same will be true when April rolls around.
-Jeffrey Weber
For more information on current 0% interest balance transfer offers, please see the main section of Smart Balance Transfers, where you can compare deals and apply online.
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