|by Mr Credit Card|
The 0% financing deal really started with GM after the recession post 9/11. Back then, drive America was the slogan and 0% financing deals for autos was the rage. The credit card issuers started to also pick up on this and offered consumers 0% teaser deals as a bait and switch tactic.
With Fed Funds at 1%, offering a 0% deal appears to be a no-brainer. After all, most consumers will continue to use the card once it is in their wallets.
However, as more credit cards offered 0% deals for balance transfer, they began to compete on the length of the introductory period. Soon, lots of cards were offering 0% balance transfer deals for 12 months.
Then issuers started waiving the balance transfer fees for the introductory period. For a while, it was the honeymoon period for balance transfer deals. In fact, many savvy consumers played the credit card arbitrage game whereby they got a 0% deal for 12 months and invested the proceeds in a high yielding online savings account.
Fed Funds however, could not stay at 1% forever. As the Fed raised rates, it began to cost the credit card issuers most just to offer the 0% deals. During the last year or so, more credit card issuers began to stop waiving the balance transfer fee during the introductory period.
Some issuers went a step further. They not only required a balance transfer fee during the 0% introductory period, but they also removed the cap on the maximum fee you pay. Since most fees are 3% of the balance transfer amount, anyone with a large balance to transfer will be hit by a huge BT fee! Here is an update for the state of the balance transfer fee situation :
Bank of America – Bank of America credit cards have now no cap to the maximum fees. You should not get Bank of America credit cards just for a balance transfer deal.
Chase – Chase has just recently removed caps on balance transfer fee as well.
Discover Cards – Discover Cards has also removed the caps on BT fees.
HSBC – If you are a HSBC bank customer, the balance transfer fee is waived if you apply for a HSBC card and do the balance transfer upon application or during the introductory window. If you are not a HSBC customer, the balance transfer fee is 3% of balance transfer, minimum of $5, and a maximum of $99.
Citicards – Citibank has removed caps on all balance transfer fees
No Balance Fee Credit Card – Where Are You?
Right now, there is are no 0% balance transfer deals that do not charge a balance transfer fee. So in a sense consumer do not really have a choice now. Cards that we would suggest include the Citi® Platinum Select® MasterCard®, the Citi Forward® Card and the Discover® More(SM) Card
The good old days have come to an end/b>