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Beware New Credit Card Balance Transfer Offers

Written by Nickel - 6 Comments

Beware New Credit Card Balance Transfer OffersAre you in debt and looking for some relief? If so, a 0% balance transfer might be just what the doctor ordered. And guess what? Unlike a year ago, when banks were tightening their belts, such offers are once again fairly common. That’s the good news.

The bad news is that the fees associated with many of these offers are climbing. The good old days of no fee balance transfers within a promo period of 12-18 months are (for the most part) long gone. Instead, most 0% offers come with a transfer fee and/or a much shorter introductory period.

While these fees used to be in the 1-3% range, and were often capped at a max of $50-$100 per transfer, credit card issuers have been ratcheting things up. In fact, according to a recent study by the Pew Charitable Trusts, balance transfer fees climbed from 3% in July 2009 to 4% in March 2010.

And guess what? The longer the intro period, the higher the cost, with promos lasting 14 months or longer costing as much as 5% of the total amount transferred. In other words… You need to look critically at any offers that you receive, and don’t forget to factor in the transfer fees when doing the math.

Source: Consumer Reports Money Blog

Published on August 20th, 2010
Modified on August 27th, 2010 - 6 Comments
Filed under: Credit Cards, Debt Reduction

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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6 Responses to “Beware New Credit Card Balance Transfer Offers”

  1. 1
    Jimmy37 Says:

    I don’t know why Consumer Reports thought this was newsworthy. Balance transfer fees have been going up for a few years now. The fee cap has been a thing of the past for a while, too. This all happened way before the new credit card bill.

  2. 2
    John Says:

    I recently took a balance transfer offer from Commerce Bank in the midwest. It was 12 months no interest, no transfer fee. This is the only offer of this kind I have received in over a year, so I snapped it up. One caveat is that the minimum monthly payments are 3% of the balance instead of 1-2%.

  3. 3
    Chris Says:

    John,

    Do you have a link for this credit card offer if it still exists?

  4. 4
    50plusfinance Says:

    I just took a balance trans fer from Discover Card. It was for 12 months 0%. The fees came to 3 months interest. At least I’ll have 8 months no interest. Tried to get a year over at CITI. With my excellent credit they would only give me $500 credit. WHY!! Its true I also am getting more offers for balance transfers. Must be all that TARP money funneling down.

  5. 5
    Rob Ward Says:

    These are bad news all around! I did this a few times trying to consolidate our debt but when I missed a payment it got us into trouble because the rate went up. Never again!

  6. 6
    John Says:

    http://www.commercebank.com/personal/cards/credit/

    I got the special connections Visa. The website only shows 6 months intro-period, but I got a “pre-approved” offer for 12 months. This is a semi-regional bank in the Misouri/Kansas area. payment options are limited with this card. You have to either set up auto-payment by mail, mail a check each month, or pay online from a Commerce bank account. There is no web payment option from outside accounts.

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