A year ago, the longest 0% balance transfer offers lasted 12 months and many credit card companies were only offering 0% deals for 6 or 9 months. Today, there are two credit cards that offer a 0% APR on balance transfers for 15 months and one that offers a 0% APR for 18 months. These are among the longest 0% credit card offers in history and, in my opinion, they won’t be here for long.
The reason I am concerned about the longevity of these 0% offers is simple. Last year, many major credit card companies lost customers by raising interest rates, cutting credit limits, and adding fees. To make up for all the lost accounts, credit card companies like Citibank have boosted promotional deals to lure in new customers. To keep pace, other companies like Discover have increased the length of their balance transfer offers.
Unfortunately, the very long balance transfer offers available today are essentially a test. Banks are trying to find out what they need to offer to bring in new customers and extending 0% interest periods is just one trick in their extensive toolbox. Generally, tests such as these can last anywhere from a few months to a year or more. However, the uncommonly long length of these deals leads me to believe they will only be available in the short term.
Anyone with credit card debt that could benefit from a 0% interest rate for 18 months should thus strongly consider taking advantage of these rates while they are still available. If, for example, you have $5000 of credit card debt currently being charged a 16% interest rate, you could save close to $1000 in interest with a 0% APR for 18 months. This savings can be used to reduce credit card debt to more manageable levels.
If 0% balance transfer offers return to the long term average of 12 months, the amount you could save on interest gets reduced substantially. For example, with a 0% balance transfer for 12 months, a person with a 16% interest rate will likely only save around $600-a full $400 less than could be saved with a 0% APR for 18 months.
Getting a 0% balance transfer for 18 months can go a long way in helping you get out of debt. Thus, it is important to take advantage of these offers while they are still available so you can maximize your savings and eliminate interest expenses for a year and a half.
For more information on current deals, see 0% APR Balance Transfer Offers in August or the 0% APR credit card section of Smart Balance Transfers.
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