In the summer of 2008, it was possible for consumers with good credit – not great, just good – to get a 0% APR on no fee balance transfers for around 6 months or get a 0% APR balance transfer for 1 year with a 3% fee capped at $75.  Today, such is not the case.  Credit limit decreases as well as other factors have dented otherwise very good credit scores, sometimes substantially.  And balance transfer fees, as well as interest rates, are increasing dramatically. Continue Reading »

Although President Obama and the House of Representatives are bringing attention to the most egregious and unfair credit card practices, an important credit card fee that has risen dramatically over the past twelve months has garnered little to no attention.  This is the balance transfer fee charged by banks when consumers shift their high interest credit card debt to credit cards with short term, 0% introductory rates.

Balance transfer fees have flown under the regulatory radar largely because consumers who utilize 0% balance transfers are more than happy to pay them in exchange for a massive reduction in their interest rates.  Continue Reading »

Over the past year, but especially in the past few months, credit card companies have been tightening credit requirements.  This tightening of the belt is profoundly effecting the ability of people who need credit to obtain it.  However, it is also hurting consumers seeking to save money with 0% balance transfers.

A year ago, it was possible to get a 0% APR for a full year on purchases and balance transfers while paying no balance transfer fees.  Today, that is an impossibility.  Major credit card companies have not only pulled no fee balance transfer deals, but increased the fees associated with balance transfers.

For example, the standard balance transfer fee in February of 2008 was 3% with a maximum of $75 per transfer.  With this pricing model, a person with a $5,000 balance on a single credit card would pay $75 for a balance transfer.  Today, that same balance transfer would rack up $150 in fees.

Unfortunately, paying balance transfer fees is now a necessity.  Nevertheless, these fees are a drop in the bucket compared to what can be saved with a 0% APR for a year.  What should be of concern to consumers is the future availability of 0% rates.

During the credit boom years, credit card companies battled each other to gain new customers.  A key weapon in that battle was the 0% interest rate.  Now, however, credit card companies are not particularly interested in taking on new customers.  And as the competition between lenders declines, so should the availability of 0% rates.

Fortunately, it is still possible to get a 0% APR for a full year on purchases and balance transfers (for more information, see these 0 balance transfer offers).  Many banks, however, are only granting these rates to customers with very high credit scores.  Those with good credit scores and high debt levels may find it hard to get approved.  And people with average credit are being shut out of the 0% marketplace.

Hopefully, the economy will improve soon and credit card companies will stop their belt tightening.  However, if things continue on their current path, getting a 0 balance transfer for a year may become extremely difficult.

The balance transfer market continued to tighten over the past few months, with more and more companies raising fees, eliminating no fee offers, and tightening the credit requirements for approval.

Discover, the last major bank to cap balance transfer fees at $75 per transaction, is now charging a full 3% on all balance transfers.  This is unfortunate as it leaves consumers with virtually no option of getting a 0% APR balance transfer for a full year without paying a full 3% balance transfer fee.

Bank of America also added to the balance transfer market malaise by removing the last major bank issued credit card that charged no fees and offered a 0% APR for 6 months.  Although this card offered no fee balance transfers, the APR after the introductory period was 14.99%, making this offer good only for those who could afford to repay their balance in full during the introductory period.

Capital One does offer no fee balance transfers with one of its card.  However, this card has some big drawbacks.  First, it does not offer a 0% APR; instead, it offers an 8.9% variable APR.  In about four months, the money you would have spent on fees will be spent on interest. 

The second drawback to this no fee offer is that the credit card is designed for people with average credit and has a maximum credit limit of $3000, generally less than most would need.

Recently, Chase changed the terms and conditions to many of their online credit card offers, particularly with regard to balance transfer fees.  Previously, Chase was one of the few remaining credit card issuers that still capped balance transfer fees at a set maximum.  For example, 3% per transaction with a maximum fee of $75 or $99 dollars.

However, as has been the case with Bank of America, Citi, and Capital One, Chase has lifted the maximum dollar amount on balance transfer fees to infinity.  For example, if you transfer a $5000 balance to the popular Chase Platinum Visa® Card, the cost will be $150.  Prior to this recent change, it would have been $99. 

As we’ve written recently, the credit crunch and resulting turmoil on Wall Street is having a very negative impact on the quality of credit card offers available, even to people with superb credit.  Unfortunately, things are likely to get worse.  Consequently, we continue to encourage anyone who is considering a balance transfer to do it now while decent, low fee 0% offers are still available.

April 28 2009 Update:  After a visitor posted on this site recently, I took a look at this posting from October of 2008 and really got a sense of how much the balance transfer landscape has changed, particularly in regards to fees.  Today, every major issuer is charging full 3% balance transfer fees on 0% deals and Bank of American has announced plans to raise balance transfer fees to 4% on June 1st.

While everyone enjoys being correct about a prediction, on this matter, I truly wish I was wrong.  Unfortunately, most of the dire predictions I began blogging about late last year are coming to fruition.  And, while my prediction that 0% balance transfers may soon disappear has yet to become completely true, these offers continue to be for shorter durations, regardless of the company.  So, lets all hope I’m wrong about 0% rates disappearing.

Credit card companies love to hide details in the fine print.  However, all companies are required to fully and clearly disclose all rate and fee information to applicants.

When you’re getting ready to apply for a balance transfer card, there is one very important disclosure to look for:  the balance transfer fee.  While different credit cards disclose this information in different ways, you will generally find information on balance transfer fees in the “Other Fees” section of the terms and conditions.

Once you’ve located this section, carefully review the specifics.  In total, there are three different possible fee structures.  The best, and most difficult to find, is a statement that there are no balance transfer fees. 

The most common balance transfer fee disclosure generally states, “ BALANCE TRANSFER TRANSACTION FEE: 3.0% for each balance transfer made under this offer, with a minimum of $10 and a maximum of $75.”

Notice that a maximum fee is clearly stated.  The third possible fee disclosure will look very similar to the one cited above.  However, there will be no notice of a maximum fee.  If there is no stated maximum fee, you will be charged a full 3% of the balance you transfer.  This means that a $10,000 balance transfer would cost $300, as opposed to $75.

If possible, we recommend finding a credit card that charges no balance transfer fees.  We list every available no fee balance transfer offer on our website.  If you cannot get approved for a no fee balance transfer card, we strongly encourage you to avoid a credit card that does not cap the maximum fee at $75.

In our opinion, the best type of balance transfer is one that offers a 0% APR and charges no balance transfer fees.  As we’ve written many times before, balance transfer fees are a nuisance.  If you are only transferring a balance from one credit card, the maximum balance transfer fee you will incur is the lesser of 3% or $75.  However, if you transfer three balances of $2500, you’ll end up paying $225 in balance transfer fees. 

 Now, the savings one gets from transferring a $7500 balance from a 14% credit card is over $1000.  However, if you pay balance transfer fees, the amount would be reduced to around $800.  Now, while balance transfer fees are by no means deal breakers, they do help boost savings (in this example, by 20%).

 Given our stance on no fee balance transfers, it should come as no surprise that our selection for “Best Balance Transfer” offers no fees on balance transfers and a 0% APR for 1 year.  And the winner is…The Citi Professional Cash Card.

Below you can vote on the best balance transfer credit cards.  You can compare all of the offers listed in the 0% APR Balance Transfer section of our website and apply online for approval.

[poll=2]