Today’s offer:  a 0% APR for 6 months on purchases and balance transfers.  While this is quite nice of them, it is further evidence that credit card companies are slicing consumer friendly 0% APR deals.  Soon, I fear, they may disappear.

Given all the horror stories consumers have been sharing about Chase, I put these offers straight into the shredder.  And, while I lament the fact that the length of the 0% rate was a lowly 6 months, the very fact that credit card companies are sending mail is the first positive I’ve seen in a while.

Lately, however, there haven’t been any credit card offers to shred.  No 0% introductory offers.  No fixed for life balance transfers.  Not even an airline credit card with an $85 annual fee.

As someone who spends much of his life researching and writing about credit cards (its as depressing as it sounds), I’ve grown to miss the afternoon ritual of reading and shredding credit card offers.  I’m really starting to think I wasted money when I bought the shredder with the special credit card hole.

While the lack of paper and plastic running through my shredder has its upsides (more trees, less wasted plastic), the complete absence of credit card offers highlights a growing problem for consumers:  nobody wants to issue credit cards.  Last year, I could count on at least three American Express, two Bank of America, a Chase, and a Capital One offering per week.  Plus, a Discover or HSBC now and then.  Now, like many Americans, I’m being completely ignored.

The number of credit card offers sent through the mail has been in decline for some time.  However, most people greeted this trend with a sigh of relief.  Unfortunately, this is not a good thing at all.  First of all, when there were offers, there was competition.  People could choose from multiple deals (you can still do this online, but again, there are fewer offers to choose from).  More importantly, people were being reminded of the fact that better deals existed.  I’m probably one of the few people who wakes up thinking about 0% balance transfers.  Most people need a reminder, like a advertisement.  I’m sure many millions of people saved quite a bit of money because a 0% credit card offer piqued their interest.

Ultimately, the sad truth is that credit card companies don’t want our business anymore.  And they definitely don’t want us taking advantage of money saving 0% APR deals.  Fortunately, for the time being, you can still get a 0% credit card online at-gratuitous plug warning-websites like Smart Balance Transfers.  Unfortunately, the people who aren’t actively seeking to save money on credit card interest are missing out on rare opportunities to reduce expenses.

So I remain sad about my silent shredder and my empty mailbox.  Sure, I love trees as much as Al Gore.  But I’d rather see a few more credit card offers sent out so more Americans can use 0% deals to help them deal with these tough times.

First, we’ll examine the reasons this is not a great deal.  To begin, this offer charges a 3% balance transfer fee with no maximum.  A good 0% balance transfer credit card caps the maximum fee at $75.  Thus, if you accept the Bank of America offer and make a $4000 balance transfer, you would pay $120 in fees instead of $75.  But that’s just the beginning. 

Buried in the fine print of your credit card is a statement such as this, “all payments will be credited to the balance with the lowest interest rate first.”  Thus, if you have a $2000 balance on your card being charged 10% and you transfer $2000, your first $2000 in payments will reduce the lower interest transferred balance, leaving you with $2000 being charged at the 10% or higher rate.

Clearly, the easy balance transfer offer at www.bankofamerica.com/easybt  is not a great deal.  And, compared to a credit card that charges a 0% APR on balance transfers for 1 year and charges low fees, it is not even a good deal.

First, she was charged a $75 balance transfer fee. If you’ve been here before, you know I strongly recommend no fee balance transfer credit cards. However, the $75 in balance transfer fees was only the tip of the iceberg. When the visitor made payments to her consolidated credit card bill, she was surprised to find out that every dollar she paid reduced the portion of her debt being charged 0% interest, not the balance being charged 14%. Fortunately, she realized this nasty credit card trick after only a few statements.

After finding my site on Google, she applied for a no fee balance transfer card and sent me an email asking that I share her story with my visitors. I was more than happy to oblige as this highlights one of the nastiest little tricks in the credit card industry. Buried in the fine print of just about every credit card’s terms and conditions will be a statement such as this: every payment will be applied to the balance with the lowest interest rate. In a nutshell, this means that if you have a balance on your credit card and you are offered a 0% balance transfer deal, you’re best off putting it in the shredder and consolidating your credit balances on a new 0% APR credit card that charges no balance transfer fees.

Here’s how the trick works. We’ll assume we’ve got a $2000 balance on credit card one getting charged 15% interest and another $2000 on credit card two at the same rate. A mail offer from credit card company one offers you a fixed 4.99% APR for life on balance transfers. On the surface, it looks like a good deal: we can reduce our interest rate by 2/3. However, there’s some nasty trickery just below the surface.

First, we’ll start with the fees. 99% of credit cards charge a 3% balance transfer fee. So, to transfer $2000 from card two, it’ll cost $60 upfront. Now, that’s not a terrible deal, since the higher interest rate would have cost us $200 more in interest over the course of the year ($140 when you factor in the fee). However, once the balance is transferred, the real trickery begins.

If you look at the fine print of the 30 page disclosures pamphlet credit card companies are required to send you every time they make a change to their terms and conditions, you’ll discover that any time you make a payment, the payment will be credited towards the balance on your credit card with the LOWEST INTEREST RATE. When we transferred our balance to the low fixed rate, we agreed that all our payments will reduce the balance being charged 4.99% interest.

What does this mean? Well, let’s say we decide to pay off $2000 of our debt. We’ve just eliminated the entire low APR balance and now have $2000 of debt being charged 15% interest. Not only are we right back where we started, we’ve wasted $60 in balance transfer fees.

Is this practice atrocious? Yes. Detestable? Clearly. Legal? 100%. Avoidable? Now it is.