After a turbulent first quarter during which banks substantially altered the terms of balance transfer credit card offers, stability returned to the market in May. The average length of balance transfer offers held steady with the multi-year high first reached in April and balance transfer fees dropped slightly to an average of 3% – a level that is just short of the multi-year low for fees first reached in March.
Average Length of 0% Balance Transfer Offers Holds Steady
While there were offer changes in May, the net effect of these changes left the average length of surveyed offers unchanged from the previous month at 12.68 months. This represents a 7.5% increase compared to May of 2011 and 4% increase since the start of the year.
While there were no particularly substantial increases or decreases in general as both the longest and shortest balance transfer lengths were unchanged, one notable card that improved its balance transfer offering is the Chase Freedom Card with $100 cash back. This rewards card had previously offered a 12 month 0% introductory rate on balance transfers and a 6 month 0% rate on purchases. It is now offering a 0% APR for 15 months on both balance transfers and purchases, making it a standout among rewards cards that offer 0% rates on balance transfers.
Average Balance Transfer Fees Decline to 3%
After dipping to a multi-year low of 2.95% in February and then bouncing back above the 3% line the past two months, balance transfer fees again declined to 3% on average. A key driver of this remains the no fee balance transfer offer available on Chase Slate, the only such offer currently being marketed by a major credit card.
Apart from the Slate Card, Chase, Citibank, Discover and Capital One all are holding fees steady at 3% on balance transfers lasting as long as 18 months. Perpetual laggard Bank of America continues to impose 4% balance transfer fees on offers ranging from 12 to 15 months. Both Barclaycard and US Bank are offering introductory 3% balance transfer fees that, in the case of US Bank, rise to 4% if no transfer is initiated within 30 days.
The ends of the last few quarters have been relatively uneventful as credit card companies have shown an increasing tendency to roll out substantial changes to balance transfer offers at the beginning of new quarters. That said, a few potential negatives for consumers exist. The primary issue would be the end of the current Chase Slate offer, which would remove the only no fee 0% balance transfer credit card from the market, leaving consumers without a no fee option. Unfortunately, the removal of this offer is much more probable than the introduction of a competing offer.
Apart from this potential headwind, the next issue on the horizon could be a shortening of the longest balance transfer offers from 18 months to a more historically reasonable 15 months. However, there has not been a significant decrease in the introductory periods of the longest offers since the end of January so this duration issue may not occur for a few more months.
For additional information and to compare current offers, please see our rankings of the best balance transfer cards of 2012.