Is the No Fee Balance Transfer a Dying Breed?
Published May 15th, 2007 in Credit Help and Tips.As more and more consumers learn about credit card balance transfers and balance transfer arbitrage, credit card issuers seem to be wising up and limiting their once golden offers.
A few months ago you could find an array of credit cards that offered 0% APR for 12 to 15 months along with no balance transfer fee. Essentially savvy credit card holders would shift large balances, extending the 0% APR for years at a time while paying no transfer fee.
It was a fruitful era, and smart consumers were able to make minimum payments and avoid finance charges, while leveraging their money and making interest-yielding investments in savings accounts and the stock market.
Well the fun seems to be coming to an end, as credit card issuers like Discover who were known for the no fee balance transfer credit card have raised the balance transfer fee to 3%, leaving Citibank as the sole provider of a no fee balance transfer credit card.
And now even Citibank is threatening to halt their no fee offer, citing the unhealthy trend of transferring balance as a detriment to good credit practices.
The message from credit card issuers is that playing the balance transfer game is a hazardous and rouge way of managing credit, and one that should be avoided.
And if these offers become less enticing to consumers, the practice will likely seize, that is, until another credit card issuer takes advantage of this space.
Even so, a 3% fee with a maximum cost of $75 isn’t a deal breaker if you don’t want to pay off a large balance, assuming you secure an interest rate of 0% APR for 12 additional months.
After all, it beats paying 20.99% APR or higher.
