Credit Cards

Tips, news, reviews, caveats, trends, updates and analysis related to consumer and business credit cards, and prepaid debit cards. From the interest rate specialists @ FedPrimeRate.com

Sunday, September 04, 2005

UK: Virgin Credit Cards Takes Action Against Balance Transfer Stoozers

Some bad news for you British 0% balance transfer stoozers: Virgin credit cards has announced that they'll be imposing a 2% fee on balances transferred away from Virgin. This new tactic by Virgin may become standard practice in the industry if it works out well for them (I know you stoozing addicts across the pond are hoping that this new initiative blows up in Virgin's face!)

Why now you ask? Well, apparently, credit card balance transfer stoozing has become very popular in the UK, and a large chunk of Virgin credit card account holders who took advantage of a 0% balance transfer offer 9 months ago may be getting ready to stooze, i.e. transfer their Virgin credit card balance to another credit card that has a favorable 0% balance transfer deal attached to it. Virgin is hoping to keep these customers by imposing this new "transfer away" fee. This move by Virgin also comes at a time when competitor Capital One is offering a new credit card with a 0% introductory annual percentage rate (Intro APR) on balances transferred until January of 2007! Virgin certainly doesn't want to see a massive exodus of customers to this new Capital One offer, no doubt.

If you asked me, this move is a bit silly on the part of Virgin because it's not very difficult to get around. A UK stoozer could just take a 0% balance transfer check from a new credit card and deposit the interest free loan into a checking account. Once the check (or cheque) clears, the stoozer could simply pay off the Virgin credit card balance, and the stoozing continues! Using this method, Virgin should have no right to charge the 2% "transfer away" fee since, from their perspective, the stoozer is simply paying off his/her credit card balance. A bit of a pain, but doable.

UK rate tarts should also be glad to know that there are still some decent fee-free 0% balance transfer deals available to them (e.g. Marbles and Co-op still offer fee-free 0% credit card balance transfers.)

Best wishes to you English rate tarts--and please think good thoughts for us as well! We in the U.S. certainly don't want this new Virgin idea to infect the American credit card marketplace!


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