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2012 survey of balance transfer cards shows offers getting better

Zero percent offers get longer, but fees remain high

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Editor's note: This story has been updated. Please see CreditCards.com's 2013 survey of balance transfer offers.

Zero percent balance transfer offers are pouring into mailboxes again, advertising increasingly better deals. However, experts warn that due to rising balance transfer fees and fine print rules, zero percent offers are not always a bargain. 

Credit card balance transfers 2012
 Balance transfer cards: Get the best deal

Experts say introductory rate balance transfer deals keep getting more attractive, but the best offers usually go only to consumers with very good credit. The zero percent offers landing in mailboxes now feature longer introductory periods, but, in some cases, higher balance transfer fees, than a year ago. Click the links below to learn more about transferring your balance to a lower rate credit card:

These introductory rate offers, which dwindled at the height of the recession, continue to make a big comeback. In the third quarter of 2011, consumers received just over 1.3 billion mail offers from credit card companies -- up from 998 million for that time period in 2010, according to Andrew Davidson, senior vice president for market research firm Mintel Comperemedia. About 64 percent of those offered an introductory APR, typically zero percent. "Competition [amongst card issuers] is very much on the rise," Davidson says, noting that many card issuers are extending their introductory periods and throwing in other perks to attract the most sought-after customers.

In fact, CreditCards.com's January 2012 survey of 37 credit cards (see a sampling below) offering introductory rate balance transfers shows that some card issuers offer introductory periods as long as 21 months -- most at zero percent interest -- and many also are offering similar deals for purchases. On the flip side, however, issuers have continued to raise balance transfer fees since our January 2011 balance transfer card survey.

The balance transfer heyday
Back when credit flowed freely, zero percent offers poured into most mailboxes regularly. "One reason why the balance transfer offer emerged was because the credit card market began to get pretty saturated and it became more difficult for some large issuers to maintain the kind of growth they wanted," says Nick Bourke, director of the Safe Credit Cards Project at the Pew Charitable Trust. "By the time the late '90s and early 2000s came around, balance transfer offers were a big part of the consumer credit card space."

However, when the recession hit and the Credit CARD Act of 2009 tightened restrictions on card issuers, many experts predicted the end of zero percent introductory rate offers. At the time, introductory rate offers were still trickling out, experts say, but often with low introductory interest rates -- usually under 5 percent -- rather than zero percent, or with introductory periods of just a few months.

"After the CARD Act, we thought zero percent balance transfer offers would just go away," says Linda Sherry, director of national priorities for Consumer Action. "But it turned out that wasn't true."

By 2010, the zero percent offer was starting to make a comeback, and issuers were offering introductory periods that ranged from a minimum of six months mandated by the CARD Act up to 18 months or longer. However, banks made up for better introductory deals by doing away with the $50 to $75 balance transfer fee caps that were common during the heyday of the zero percent offer. According to a report released in July 2010 by the Pew Charitable Trust and co-authored by Bourke, only one percent of bank credit cards at the time capped balance transfer fees -- and the median fee had risen from 3 percent in July 2009 to 4 percent in 2010.

The new zero percent offer
Experts say introductory rate balance transfer deals keep getting more attractive, but the best offers usually go only to consumers with very good credit. The zero percent offers landing in mailboxes now feature longer introductory periods, but, in some cases, higher balance transfer fees, than a year ago.

Experts also say card issuers are targeting specific consumers with these offers. According to Lita Epstein, author of "The Complete Idiot's Guide to Improving Your Credit Score," issuers now typically offer zero percent introductory periods of a year or more to consumers with credit scores of 720 and higher. Issuers this year also are targeting consumers who carry a balance on their cards; for example, with offers for cards such as Citi Diamond Preferred, Citi Simplicity and Chase Slate, according to Davidson. "This year you're seeing more card issuers specifically target customers who revolve, with very attractive deals," Davidson says.

Sherry agrees: "It's still a very competitive market, especially for people with decent credit who are carrying balances -- those [customers] are the plums everyone wants."

Our CreditCards.com survey of 37 cards featuring a promotional balance transfer offer found that:

  • Many card issuers have increased the length of the introductory period since early 2010, and some of the cards that were offering low interest rates initially now offer zero percent.
  • Of the cards that do offer zero percent initially, 12 cards offer it for six months, one for six to nine months, three for 12 months, seven for 15 months.
  • The Citi Platinum Select MasterCard, the Citi Diamond Preferred Card and the Citi Simplicity Card all offer zero percent on balance transfers for 21 months, while the second two also offer the same deal on purchases.
  • Of the cards that do not offer zero percent, the introductory APR ranges from 1.99 percent to as high as 19.24 percent.
  • Almost all of the cards charge balance transfer fees, with few waivers or caps. Of the 34 cards that charge balance transfer fees, 17 charge 3 percent of the transaction amount, 10 charge 4 percent and seven charge 5 percent. However, 10 of the cards that charge 4 percent or 5 percent offer a 3 percent fee during the introductory period. None of the no-fee cards offer zero percent APR for the introductory period.
  • Only two cards, the HSBC MasterCard Business card and the PenFed Visa Platinum Cash Rewards card, have balance transfer fee caps -- one $50 per transaction and the other $250.

Experts predict that these offers will keep on coming -- and deals will get even better, with more perks and rewards. For example, Davidson says Citi Simplicity is sending offers of a $100 sign-on bonus with no late fees, while the Chase Slate Card offers a special feature such as split purchases to help customers manage money, and the Citi Diamond Preferred Card offers concierge services for travelers. "There are some particularly sweet [balance transfer] deals out there at the moment," Davidson says.

Make the most of zero percent offers
Consumers who want to take advantage of zero percent balance transfer offers should be careful to use the offers wisely, experts say. Here are some tips:

  • Make sure your new credit limit is high enough to cover the balance you want to transfer. "If you have a $30,000 balance, most companies are not going to give you that amount," Sherry says. "They might give you less, then leave you with a balance on your old card, which negates your reason for doing the transfer."
  • Follow the rules carefully so you don't lose the introductory rate -- or, worse, get hit with a penalty interest rate of up to 30 percent or more. "Banks are not giving you a zero interest offer because they expect not to make money," says Ken Kamen, president of Mercadien Asset Management. "The bank is betting against you that you're going to be late on a payment, you're going to break a rule, you're going to go over your credit limit. If you trip just once, you could be looking at a very high interest rate and all your moves were for nothing."
  • Shop around for the best deal. "Look for the longest introductory period, the lowest interest rate during that time, and a very close to average interest rate when the intro period ends," Sherry says, adding that customers should see if they can get a balance transfer fee waiver, too. Be on the lookout for an offer that includes such a waiver -- they're rare, but they do exist -- or call the credit card company to ask for one, Sherry recommends.
  • Make a plan to pay it off early. "If your teaser period is a year, take the sum of money you're transferring and divide by 11 and make those payments because you always want to be paid before you get to the end of the period," Sherry says.
  • Avoid playing the zero percent game. "People should look for a card they can stick with -- not jump from zero percent offer to zero percent offer, which could affect your credit and complicate your financial life," Sherry says.

Consumers might never see the excessively generous zero percent offers of pre-recession years, but those with good credit who follow these tips might be able to score an attractive deal now -- or an even better one in the future.

Breaking down introductory balance transfer offers
Below is a sampling of popular credit cards that currently feature introductory balance transfer offers.
Name of Card Interest rate, default rate and annual fee 0% balance transfer period Balance transfer fees Type of card
Bank Americard Visa Card from Bank of America 0% for 15 months following opening of account, then 12.99%-20.99% based on creditworthiness. Default rate: up to 29.99%. No annual fee. 12 billing cycles for transfers made within 60 days of account opening. 
$10 or 4% of the amount of each transaction, whichever is greater. Consumer
Carnival World MasterCard from Barclays 0% for first 15 billing cycles, then 13.99%-20.99%, based on creditworthiness. Default rate: up to 30.24%. No annual fee. 15 billing cycles after account opening. $10 or 3% of transfer, whichever is greater, during first 15 billing cycles, then $10 or 4% of the amount of each transfer, whichever is greater. Consumer
Chase  Business Ink 0% for 6 months, then 13.24%-19.24% based on creditworthiness. Default rate: 29.99%. No annual fee. 6 billing cycles after account opening.
$15 or 5% of the amount of each transfer, whichever is greater. Business
Chase Freedom 0% for 12 months, then 12.99%-20.99%, based on creditworthiness. Default rate: 29.99%. No annual fee. 12 billing cycles following account opening for transfers made within 30 days of account opening.
$5 or 3% of the amount of each transfer, whichever is greater. Consumer
Chase Slate 0% for 15 billing cycles, then 11.99%-21.99%. Default rate: 29.99%. No annual fee. 15 billing cycles after account opening.
$5 or 3% of the amount of each transfer, whichever is greater Consumer
Citi  Forward 0% for 12 months, then 12.99%-22.99%, based on creditworthiness. Default rate: 29.99% maximum. No annual fee. 12 months from date of account opening when balance transfers are completed within 4 months of account opening. $5 or 3% of the amount of each transfer, whichever is greater. Consumer
Citi Platinum Select MasterCard 0% for 21 months, then 11.99%-21.99% based on creditworthiness. Default rate: 29.99% maximum. No annual fee. 21 months from date of account opening when balance transfers are completed within 4 months of account opening. $5 or 3% of the amount of each transfer, whichever is greater. Consumer
Discover More 0% for 15 months date of first transfer that posts to the account by July 10, 2012, then 10.99%-19.99%, based on creditworthiness. Default rate: up to 15.99%-24.99%. No annual fee. 15 months from date of first transfer that post to account by July 10, 2012. 3% of the amount of each transfer for transfers that post to account by July 10, 2012 with the 0% intro APR balance transfer offer. Consumer
Discover Open Road 0% for 15 months, then 10.99%-19.99%, based on creditworthiness. Default rate: 15.99%-24.99. No annual fee. 15 months from date of first transfer, for transfers that post to account by July 10, 2012. 3% of the amount of each transfer. Consumer
HSBC MasterCard BusinessCard 0% for 6 months, then 21.24%. Default rate: None. No annual fee. 6 months from account opening. $5 or 3% on each transaction, whichever is greater; $50 maximum, unless otherwise disclosed. Business
PenFed Visa Platinum Cashback Rewards 1.99% for 24 months, then 13.99%. Default rate: 17.99%. No annual fee None. Promotional rate of 1.99% for 24 months on transfers made between Jan. 1, 2012 and March 31, 2012. 3% (minimum $10, maximum $250) per transaction. Reduced to 1% (minimum $10, maximum $250) on transfers made between Jan. 1, 2012 and March 31, 2012. Consumer
U.S. Bank Visa Platinum Credit Card 0% for first 12 billing cycles, then 9.99%-23.99% based on creditworthiness. Default rate: none. No annual fee. 12 billing cycles for balances transferred within 30 days of account opening. $5 or 4% of the amount of each transfer, whichever is greater Consumer
Visa Black Card from Barclays 0% for 15 billing cycles, then 14.99%. Default rate: Up to 30.24%; $495 annual fee plus $195 for each authorized user added to the account. 15 billing cycles after account opening. $10 or 3% of the amount of each transfer, whichever is greater, after account opening. After that, $10 or 4% of the amount of each transfer, whichever is greater. Consumer
Wells Fargo Rewards Card 0% for 6 months, then 12.15%-23.15%, based on creditworthiness. Default rate: none. No annual fee. 6 months. $5 or 3% of the amount of each balance transfer, whichever is greater, for 6 months. After that, up to 5% for each balance transfer, with a minimum of $5. Consumer
Note: This information is intended to be a snapshot of balance transfer offers as Jan. 10, 2012; card offers can and do change frequently. All information was found by visiting issuers' websites. All card APRs are variable rate unless otherwise stated.

See related: A guide to the Credit CARD Act of 2009

Published: January 17, 2012



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