In an extremely surprising move that I must stress is EXTREMELY SURPRISING, Bank of America extended the introductory APR on balance transfers on a number of their credit cards to 15 months.  As most credit card companies have been cutting back on the duration of 0% APR balance transfer offers, Bank of America’s out of left field decision to increase introductory periods in the midst of a consumer credit crisis seems absurd.

That said, it is now possible to get a 0% APR for 15 months on balance transfers.  This is good news.  However, this sudden change of course may not benefit most people searching for a 0% APR balance transfer.  Why?  In all likelihood, Bank of America will only grant this 15 month 0% APR to individuals with the highest credit scores.  The majority of consumers, even those with good credit, may not benefit from this new offer at all.

And there’s also a potential rub.  In a recent SCC article, “Will You Pay for Credit Card Company Mistakes? Of Course!,” I discussed a number of ways that consumers will foot the bill for the mistakes of credit card companies.  One of the issues discussed was how reducing credit limits hurts credit scores.  Another way credit scores can be adversely effected is by applying for credit cards.  For the most part, this is not a major factor.  However, if you apply to get a 0% APR for 15 months and are not approved and then apply for a different credit card, it may appear that you are desperate for credit.  This may, in turn, cause your other credit card companies to raise your interest rates or reduce your credit limits, thus sticking you in what’s known as a negative credit loop.

Until our site has collected enough data on the performance of these extended 0% APR offers, we advise consumers to proceed with caution.  However, if you have excellent credit, getting a 0% APR for 15 months is probably within your reach.

For more information on Bank of America credit cards and 0% balance transfers, please use the left navigation to review the appropriate sections in the credit card section of Smart Credit Choices.

Yesterday I saw a credit card that offered a 0% balance transfer for life.  Then I saw a unicorn and stole a pot of gold from a leprechaun.  And then I woke up.

In the past,  there was a very remote possibility of getting a 0% APR on balance transfers for life.  Getting the offer required a bit of luck, as it was a mail offer from Discover that, it seems reasonable to assume, was aimed at consumers with excellent credit.  I found evidence of this offer’s existence on the website Consumerist.com, complete with this image:

There are a few things of note in the above image.  First, the offer is from September or October of 2007 at the latest.  The credit card world has changed a lot since then.  The second is a clause which could be easily exploited.  It requires that two purchases be made every month.  This exists for a reason.  All payments go towards the balance on your card being charged the lowest interest rate, so if you use the card for purchases, you start accruing interest.

An obvious loophole would be to make two very small purchases every month.  However, all the strategizing in the world isn’t gonna help you find an offer for a 0% APR balance transfer for life.  The fact of the matter is that most banks are unwilling to lend people money for balance transfers at a fixed for life APR of 5%, let alone 0%.

While logic led me to believe it was impossible for a 0% APR balance transfer for life existed, I tried my hand with Discover’s customer service.  And the reps I spoke to thought I was crazy.  Real crazy.

So, while the credit crunch drags on, you can continue to pay interest and wait for a magic invitation to arrive in the mail from Discover that offers a 0% APR for life on balance transfers.  Or, you can take control of your financial life and settle for a credit card that offers a 0% APR on balance transfers for 1 year like the rest of us mortals.

The way the credit crunch is going, I may find myself blogging about how these offers have become a relic of the good old days.  And that time may be soon.

For information on real, (relatively) easy to get 0% balance transfer deals, visit the balance transfers section of Smart Credit Choices.  Ironically, some of the best deals on the market come from Discover, the former guardian of the 0% for life gate.

Disclaimer:  The following information is merely an explanation of a money saving technique commonly referred to as balance transfer arbitrage.  It is by no means an endorsement of this technique and should not be constituted as financial advice.

As you can tell from the above disclaimer, balance transfer arbitrage is a money saving technique that is not without drawbacks.  Here, we will discuss the premise, the process and the risks of this strategy.

First, lets begin with the tools:  a 0% APR balance transfer offer, credit card debt and money in the bank (yes, money in the bank!)  For this example, we’ll assume credit card debt of $10,000 on a single card and a the same amount in cash.  To start the process, a person transfers the $10,000 to a credit card offering a 0% APR on balance transfers for 1 year and charges a maximum balance transfer fee of $75.  (You can compare these offers in the balance transfers section of this website.)

Once you set up the balance transfer, open up a high yield savings account.  While rates are down substantially over the past year, it is still possible to find one that offers an interest rate in the mid to high 3% range (see http://www.bankrate.com/brm/rate/deposits_home.asp for current rates).  Now, deposit your $10,000 into the high yield savings or money market account. 

Over the course of a year, you’ll earn around $300-$350 in interest, depending on your interest rate, while paying no credit card interest.  During the course of the year, make your minimum monthly payments to the credit card (obviously) and be sure to keep your savings in the bank.  At year’s end, taking balance transfer fees into consideration, you’ll have an extra $275 after paying off your debt.

And, while the taxman will want a bite out of your savings, it is still $275 you can create by spending a half hour online. 

Balance transfer arbitrage doesn’t have to end after one year.  There are plenty of credit card companies willing to lend to consumers with good credit.  (At least, they have been in the past)  However, don’t count your chickens until the eggs hatch.  Yet, if you can transfer your balance to another 0% card, there’s no reason not to.  Keep you money in the bank, let the interest pile up, and gradually pay down your debt while earning a modest income on cash you’d otherwise have no access to.

To review credit card candidates, visit the 0% APR section of Smart Credit Choices to compare credit cards to use for balance transfer arbitrage.