For the second year in a row, Discover is running a limited time 0% APR no fee balance transfer promotion. This is presently the only no fee balance transfer offer on the market.

Consumers who apply and are approved for this Discover card (see online application here) pay no fees to transfer balances and are granted a 0% APR on balance transfers and purchases for 12 months. Because balance transfer fees typically range from 3% to as much as 5% of the amount being transferred, opting for this offer saves consumers $30-$50 for every $1,000 transferred. On a $3,000 balance transfer, this works out to an additional $90-$150 of savings in addition to what can be saved with a 0% interest rate. Continue Reading »

January typically marks the beginning of balance transfer season for consumers and 2012 looks to be getting off to a good start. Consumers who anticipate needing a significant amount of time to repay their credit cards will find it possible to get a 0% APR balance transfer lasting 21 months, while those who are confident they can repay balances sooner can get a 0% APR for 12 months and pay no balance transfer fees.

The Best Balance Transfer Offers of the Month

Given the availability of both long term 0% APR offers with low 3% fees and shorter term no fee balance transfer cards, selecting the best balance transfer card really comes down to individual needs. Consumers who want to save on upfront fees ($30 for every $1,000 transferred) and are comfortable with only a 12 month 0% balance transfer period are likely best off with the recently released, limited time no fee balance transfer offer from Discover. This card is ideal for consumers who simply need a few months to get caught up on outstanding bills. Continue Reading »

In the world of credit cards, few things sound better than 0.0% APR. Credit cards, which have no finance charges are among the most sought after things one can have in his or her wallet or purse. However, many people are turned off by balance transfer fees, which can run as high as 5%. Don’t be. Given your current finance charges, that fee can be offset sooner than you may think. Continue Reading »

Editor’s Note:  This article was originally posted in April of 2009.  Since that time, many credit card companies have increased balance transfer fees to as much as 5%, depending on the offer.

According to a recent report from Bloomberg, Bank of America intends to raise balance transfer fees from the industry standard 3% to 4%, a new high for this growing source of fee revenue for banks.  This 30% increase in balance transfer fees, scheduled to take effect on June 1st, marks a continuation of a disturbing trend that has dramatically increased the cost of balance transfers over the past 15 months.

The Rise of Balance Transfer Fees During the Credit Crunch

At this time last year, Bank of America offered no fee balance transfers tied to credit cards with 0% introductory rates that lasted 6 months.  In late 2008, Bank of America increased these fees across nearly every card, to a flat 3% fee with no maximum. Continue Reading »

Update 1:  American Express No Fee Balance Transfers

American Express has shifted its balance transfer offerings dramatically over the past few months.  From 2005 to 2008, they offered fixed APR balance transfers for life with a number of cards.  However, as the credit crunch intensified last fall, they ceased providing these offers, replacing them with low rate balance transfers (2.9% for a year) that also carried 3% balance transfer fees. 

Update 2:  Industry Trends

If current industry trends continue, we may see the disappearance of the 0% rate altogether in the coming months, much as we have seen the disappearance of no fee balance transfers.  In all likelihood, this will be replaced with low rates of 2.9% that were common in the late 90′s and early 2000.  For consumers, this is not a good thing.  0% APR balance transfers provide a refuge for people with good credit scores who are working to pay down debt. 

As I’ve written before, and will surely write again, people contemplating a 0% balance transfer should act quickly before these offers become more scarce.  Credit card companies simply do not want to give consumers free money for a year, even if they are extracting 3% balance transfer fees.  And over the past few months, credit card companies have gotten stingier.  Nothing has occurred to change this.  In fact, the financial chaos engulfing all the major credit card companies will in all likelihood lead them to get even stingier.  Just take a look at the stocks of companies like Capital One, Discover and American Express.  As these continue to drop, so will the availability of options for consumers.

Stock Quotes:

http://www.google.com/finance?q=NYSE:COF

http://www.google.com/finance?q=axp

http://www.google.com/finance?q=dfs

On December 5th, Bank of America pulled the Pet Rewards Visa from internet marketing channels.  This card, which had offered a 0% APR for 6 months on no fee balance transfers, was the last credit card from a major company to offer a no fee, 0% APR deal.

While this is yet another setback, the removal of this offer is not the worst news for most consumers.  In fact, it may save consumers money in the long term.  The issue with this card, like all credit cards that offered no fee balance transfers for 6 months, lay in the fact that after the 0% period expired, the interest rate jumped to 14.99%.  Thus, unless you repaid your outstanding balance in 6 months, you may have ended up giving back all the balance transfer fee savings by paying interest.

A year ago, it was very possible to transfer balances from card to card and keep 0% rates going for years at a time.  However, credit card companies have really cut back on the availability of 0% offers, and most consumers will find it difficult to do balance transfers every 6 months.

Thus, the best balance transfer offers for consumers remain credit cards that offer a 0% APR for a full year on purchases and balance transfers.  While some will shrug at the idea of paying the 3% balance transfer fee, the money that can be saved on interest over the course of a year more than offsets this nuisance fee.

All year long, credit card companies have been pulling the plug on no fee balance transfer deals, raising balance transfer fees, and making it harder for consumers to get approved for 0% credit cards.  And the market just isn’t getting any better.

With no credit cards offering no fee balance transfers for more than 6 months, and credit availability becoming an issue, the risk involving in opting for a no fee balance transfer over a low fee balance transfer is incredibly high.  Here are just a few drawbacks to current no fee balance transfer deals:

1. Current offers only last six months, and don’t include the time it takes to process a balance transfer.  This can be up to one month, which not only reduces your 0% period to 5 months and shaves 10-15% of the savings you would get during that period.
2. With uncertainty in the credit markets, it may not be possible to get a 0% APR for a full year after the 6 month intro period expires. 
3. The only no fee offer from a major bank comes from the very troubled Washington Mutual.  This offer, the ESPN Visa, has a variable rate of up to 23.49% after the 0% period expires.  Since applying for a credit card has a small negative impact on your credit score, it is feasible that you could end up with a higher interest rate after your balance transfer than you had before it.

Given all these drawbacks, choosing a 0% no fee balance transfer card can end up costing a lot more interest than it would save in fees.  Here are a few examples:

1. If you transfer $4000 from a single credit card, you would save $75 in fees versus a low fee balance transfer card.  If your current rate is 12%, you would then save around $240 on interest during the first six months.  However, you would essentially end up repaying that amount during the next six months, depending on how much of your balance is repaid.  If, however, you paid the $75 fee and got a 0% APR for a full year, you would save $430 over the course of a year.  Clearly, paying a balance transfer fee is a much better option.
2. If you transfer a total of $4000 from two cards that each have balances of $2000, you would pay $120 in fees with a low fee card (3% of each transaction).  However, at the end of a year, your total savings would be $385 with a low fee card as opposed to about $0 with a no fee card that only offers a 0% APR for 6 months.

Clearly, while saving $75 to $120 on fees may seem like a good deal, securing a 0% APR for a full year provides significanly more value.  The key, however, is to stick with a card that offers low fee transfers (i.e., 3% with a maximum of $75 as opposed to 3% with no limits.)  Presently, the most prominent company offering low fee balance transfers is Discover. 

To calculate how much you can save with a low fee balance transfer credit card that offers a 0% APR for 1 year, try our balance transfer calculator.