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 »

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.

As of June 30th, the no fee balance transfer deal offered by American Express for its series of IN credit cards will no longer be available.  The offer, available with the IN:LA, IN:NYC, and IN:Chicago cards, provided a 0% APR on purchases and balance transfers for 6 months and charged no balance transfer fee.

The removal of these three offers from the market is not surprising.  Just about every credit card company has stopped offering no fee balance transfers since the beginning of this year and most have raised balance transfer fees substantially.

Currently, the ESPN Visa, a Washington Mutual credit card, continues to offer a 0% APR for 6 months on no fee balance transfers.  However, most people will save more money by opting for a low fee balance transfer offer.  Additionally, many credit card companies have increased their requirements to qualify for 0% offers, and with the economy’s future uncertain, it may be very difficult to get approved for a new 0% credit card when the 6 month intro period expires.

Thus, we recommend applying for a credit card that charges low fees and offers a 0% APR on balance transfers and purchases for a full year.  You can learn more, compare current offers, and apply online at our main site, www.smartbalancetransfers.com.

The ESPN Visa card, issued by Washington Mutual, is currently offering a 0% APR on balance transfers and purchases for 6 months.  There are no fees on balance transfers initiated at the time of application.

The ESPN Visa is a sports affinity credit card that offers consumers a range of sports themed rewards.  Aside from offering no fee balance transfers, this card also offers new customers the following benefits:

• 2,500 Bonus Points upon first card use within one year.
• Rewards start at just 2,500 points.
• No annual fee.
• Earn 5 points for every $1 you spend on purchases from ESPN, including ESPN Shop, ESPN Zones, ESPN Sports Concierge Service, and more.
• Earn 1 point for every $1 you spend on other purchases.
• Earn tickets and VIP Access to Sporting Events, Sports Merchandise and Collectibles, Retail, Dining, and Travel Rewards through the ESPN Total Access Rewards Program†.
• Use the FREE ESPN Sports Concierge Service to buy hard-to-get tickets, arrange travel to sporting events, or create your own ultimate fan experience.

You can learn more about the ESPN Visa by viewing the online application or compare other balance transfer credit cards in the credit card offers section of Smart Balance Transfers.

The days of 0% APR no fee balance transfers are over-for now.  This week, Citi stopped offering no fee balance transfers with its Citi Professional Cash card.  This was the last no fee balance transfer offer from a major bank.  While Bank of America currently offers a 1.9% APR on no fee balance transfers with its Make a Wish card, this APR is only for 6 months.  Paying a balance transfer fee and getting a 0% APR for 1 year provides much more savings. Now that the market currently lacks a no fee balance transfer credit card, consumers should focus on credit cards that charge low balance transfer fees. 

What is a low fee balance transfer?  In a nutshell, a low fee balance transfer is one with a limit on maximum fees.  Currently, all major credit cards are charging a 3% balance transfer fee per transaction.  However, some credit cards have no limit on balance transfer fees, while others cap fees at $75.

Finding a low fee balance transfer credit card can provide a great deal of savings.  For example, if you transfer a $5000 balance to a credit card that has no limit on balance transfer fees, you would spend $150 in fees.  The same balance transfer, if done with a low fee balance transfer card, would only cost $75.

We have compiled a complete list of balance transfer credit cards here for easy comparison.

Even though balance transfer fees are now unavoidable, the amount of money you can save with a 0% APR balance transfer is still significant.  For example, if you have a $5000 balance on a credit card with a 12% interest rate, you can save over $620 this year on interest.  If you factor in the balance transfer fee, you still save over $550 on interest.

To find out how much you can save with a 0% APR balance transfer, check out our balance transfer calculator before applying for a new credit card online.

In a move that has become all too common over the past year, Bank of America recently stopped offering 0% APR no fee balance transfers with its Platinum Plus Visa.  To make matters worse, they have put no cap on balance transfer fees.  This is a seismic shift, as what was once the best balance transfer credit card on the market is now one of the worst.

Here’s the problem.  Most credit cards charge a 3% balance transfer fee with a maximum fee of $75.  Thus, if you transferred a large balance of $10,000, your balance transfer fee would be $75.  With the new fee structure of the Bank of America Platinum Plus, the fee on a $10,000 balance transfer would be $300, or 4 times the maximum fee most other issuers would charge.

The elimination of this no fee balance transfer credit card from the market has left only one current offer available to consumers looking to save money on balance transfer fees.  And, based on the way credit card companies have been behaving, it is only a matter of time before the final no fee balance transfer credit card is gone.

What’s the best balance transfer option now?

As I write this, Citi still offers one no fee balance transfer credit card (see the no fee balance transfers section of SmartBalanceTransfers to learn more).  If, however, you need to transfer a balance from a Citi card, there are no current fee free offers.  If you find yourself in this position, or cannot get approved for the Citi no fee credit card, Discover and Chase still offer 0% APR balance transfers with $75 fee limits.  Over the course of a year, these credit cards will provide hundreds, if not thousands in savings.  Sure, you’ve got to pay a little more in upfront fees, but most reasonable people would much rather pay 3% in fees than 15% in compounding interest.

Hopefully, this decidely consumer un-friendly trend will end soon.  However, with the credit crunch still looming over everyone’s head, it looks like deals will get worse before they get better.

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.

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In our opinion, the best balance transfer credit cards charge no balance transfer fees. Consequently, our selections for best balance transfer credit cards are the Citi Professional Card, which offers a 0% APR on balance transfers for nine months and the Bank of America Platinum Plus Card, which offers a 0% APR on purchases and balance transfers for 6 months. Both of these cards charge no balance transfer fees.

The runners up are credit cards that offer a 0% APR on balance transfers for 1 year, a 0% APR on purchases as well as low long term APRs. Cards that fall into this category are the Discover More Card and the Chase Platinum Card.

With credit markets tightening, it is becoming more difficult to get approved for a good 0% APR balance transfer credit card. Thus, we suggest that anyone who carries a balance on a high interest credit card take action soon to lock in a 0% rate before the banks get stingier.

To compare all current balance transfer credit cards, including our picks for the best balance transfers, visit the credit card comparison section of SmartBalanceTransfers.

Also, feel free to post a comment or shoot us an email with your opinions.