Balance Transfer Credit Card Offers Making a Comeback
0% balance transfer credit card offers were at one time quite popular among consumers looking to save money on high interest credit card debt. Prior to the recent economic downturn, balance transfer offers were plentiful with many consumers looking no farther than their mailbox to find a great deal. Then the economy took a nose dive and many consumers found themselves facing growing credit card balances with little or no resources to pay the bill. As the default rate grew, lenders began the mad scramble to mitigate their losses. The lending environment went through a major adjustment period with one of the changes being the end of 0% APR credit card offers. Mailboxes that once held one or more offers per week, no longer provided options for struggling consumers.
The end of balance transfer offers
Many experts predicted that this change may be permanent, however it appears that is not the case. In 2010, consumers still wary from the recession, slowly began to emerge from their self imposed financial restraints. A slowly recovering economy and increase in consumer confidence and spending has resulted in yet another change within the lending industry. As a result, more and more balance transfer offers are making their way to consumer mailboxes once again.
Familiar concept with new rules
Balance transfer offers may be on the rebound, however consumers are urged to proceed with caution. The recession provided consumers with an opportunity to see where improvements needed to be made in the managing of personal finances. Many consumers who at one time might have been chomping at the bit to sign up for another credit card are now thinking twice before making that move. This wariness could prove beneficial as the new balance transfer offers may look like their predecessors, however new rules apply.
What has changed
Consumers should read the terms and conditions associated with any credit card offer to fully understand the contract to which they will be bound. Some credit cards, like the BankAmericard Cash Rewards Visa, now only offer 0% rates on purchases. In the past, balance transfer offers were very popular due to attractive introductory interest rates and low balance transfer fees. Consumers may notice a change in these areas when reviewing new balance transfer offers. Introductory rates are higher with shorter introductory periods. In addition, higher transfer fees may apply. At first glance, many consumers may decide that the new balance transfer offers do not offer significant savings, however that is not always the case. Take for example changes across the industry as a whole. When the average interest rate was 13%, a balance transfer offer boasting 0% interest was considered a good deal. In the current environment, consumers are looking at credit card accounts with interest rates double or triple that of a few years ago. Now, a balance transfer offer featuring a 9% interest rate, while higher than before, is still attractive.
Are you saving money
Consumers should view the return of balance transfer offers as another option to reduce high interest credit card debt. There are several factors to consider before deciding if a balance transfer credit card is a money saving move. Compare the interest rates applied to your current accounts with the interest rates provided in the balance transfer offer. Keep in mind, the promoted interest rate is an introductory rate, therefore you must determine how long that rate will apply and what rate will be applied after the introductory period expires. Also determine how much the transfer will cost in fees. Once you have compared all the numbers, you can then make an informed decision regarding balance transfer offers.
