The balance transfer credit card market improved for consumers this month as a number of credit card companies have favorably altered the terms of 0% balance transfer offers. At the start of October, Discover increased the length of one balance transfer offer to 18 months, while dropping balance transfer fees on a 0% for 12 month offer to 3%. Citibank also decreased balance transfer fees on the Citi Diamond Preferred Rewards Card to 3% for 0% APR balance transfers lasting 12 months.
The Longest Balance Transfer Offers in October
Both the Citi Platinum Select and Discover More credit cards currently offer 0% interest rates on balance transfers for a full 18 months to approved applicants. Each card charges a 5% balance transfer fee. These are presently the longest 0% offers on the market and last 6.7 months more than the average 11.3 month duration of cards surveyed for this report. While 5% balance transfer fees are at the high end of the range, a number of credit cards with much shorter 0% interest periods are charging similar rates.
Average Balance Transfer Credit Card Fees in October
The average balance transfer fee among the credit cards surveyed this month dropped to 3.8% from a recent high of 4.1%. The aforementioned drop in fees on the Citi Diamond Preferred Rewards Card from 5% to 3% as well as a drop in fees with the Discover More – $100 Cashback Bonus card from 4% to 3% played a large role in this drop.
While Discover and Citibank dropped balance transfer fees on these 0% for 12 month offers, a number of credit card companies continue to charge 4% fees on balance transfers that last less than one year. Bank of America currently charges 4% balance transfer fees on some 0% balance transfers that last between 7 and 10 months (based on a review of credit) and the U.S. Bank Visa Platinum Credit Card charges a 4% fee for 6 month 0% balance transfer fees. Wells Fargo, which offers a 3.9% introductory rate for 6 months, charges a 3% fee.
No major credit card company is currently offering 0% no fee balance transfers. These offers have now been absent from the market for close to 2 years.
The Best Balance Transfer Offers in October
For consumers who know they will need more than one year to repay their current credit card debt, the Discover More Card and the Citi Platinum Select Card are the longest and therefore best offers. There is one key difference between these cards. The Citi Platinum Select Card offers a 0% for 12 months on purchases in addition to a 0% for 18 months on balance transfers. The Discover More card offers the same 0% for 18 months on balance transfers, but only a 0% for 6 months on purchases. Thus, consumers who know they will be making new purchases on the card are better off with the Citi Platinum Card.
Consumers who know they will need less than a year to repay their credit card debts can take advantage of the recently lowered fees on the Discover More – $100 Cashback Bonus or Citi Diamond Preferred Rewards cards, both of which charge 3% fees and offer 0% balance transfers for 12 months. Again, the primary difference between these two cards is the length of the 0% rate for purchases, which is 6 months with Discover and 12 months with Citibank.
Final Thoughts on Balance Transfer Offers in October
While credit card companies such as U.S. Bank and Bank of America continue to charge high balance transfer fees for relatively short 0% offers, Citibank and Discover continue to provide a solid range of options for consumers with extremely long 0% rates and low fee offers on 12 month balance transfers.
Over the past year, credit card companies have been tweaking both the length and fees of balance transfer offers and it is likely that this trend will continue in the coming months. However, as long as the Federal Funds rate remains essentially at zero and the economy does not slip into a second recession, generous deals are likely to continue.
-Jeffrey Weber
For additional information on current credit card offers including rates, fees and promotions, please see the 0% balance transfer comparison section of Smart Balance Transfers.
Methodology: Average balance transfer fees and durations were based on 15 prominently advertised credit cards from Capital One, Bank of America, Chase, Citibank, U.S. Bank and Discover. American Express was excluded as it continues to abstain from the 0% market. Wells Fargo was excluded as it currently offers 3.9% balance transfers online.
Disclaimer: All information is accurate as of the date of publication. Before applying for any card, please closely examine the credit card application’s terms and conditions as terms change frequently.
October 7th, 2010 at 2:17 pm
Editor’s Update: Today, Citibank not only increased the length of the 0% APR balance transfer offer for the Citi Platinum Select to 21 months, they also reduced the fee to 3%. For more details, see the Citibank balance transfer section on Smart Balance Transfers.