Today’s Credit Issues: Why Balance Transfer Offers have Changed
Balance transfer offers were always the way to go. Great, promotional offers, such as 0% interest rates, were the norm and it was quite easy to transfer your credit card balance at a whim. Now, however, creditors have become quite a bit stingier when it comes to balance transfer offers.
This change is due in part, perhaps, to the credit crisis, the poor economy and, most recently, the impending changes in credit card legislation.
Whatever the reason, one thing’s for sure: creditors are pulling back and tightening their belts in an effort to minimize losses in this tough economy.
Today’s Balance Transfer Offers
We’ve all seen a sharp decline in the number of credit offers we receive in the mail on any given day; and that goes for balance transfer offers, as well.
In addition, many of the balance transfer offers we may receive are not quite as attractive as they once were. For example, promotional rates are now quite limited, and balance transfer fees are much higher.
You may find a promotional rate of 0%, for example, but it may last only six months instead of the standard, 12 (or even 24) months we were all so accustomed to receiving.
It is important to also pay close attention to the creditor’s balance transfer fee. This fee, which is based on how much you are borrowing, has recently begun creeping up. Many creditors used to charge about 3% as a balance transfer fee (with a cap of about $50 to $75), and it wasn’t uncommon to see balance transfer fees waived.
However, today’s balance transfer offers are as high as 5%, and caps are becoming a thing of the past. For example, a few years ago if you were to transfer a balance of $10,000, you would pay no more than $75 in fees. However, transfer a $10,000 balance today and you could be faced with a balance transfer fee as high as $500.
Your Options
Don’t get me wrong: there are still plenty of good balance transfer offers around; you just need to search for them.
There are three things you should pay close attention to when deciding to transfer a balance: the introductory rate (and how long it will last); the interest rate on the credit card once the introductory period ends; and the balance transfer fee.
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