Credit Cards

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Wednesday, November 23, 2005

Credit Card Companies Continue to Sour The Balance Transfer Milk In The UK

Credit card companies in the UK, fed up with losses associated with the generous 0% balance transfer deals they've been offering, have started to implement changes to their interest free offers in an effort to boost sagging profits and to discourage balance transfer surfing and stoozing.

Capital One, MBNA and others started charging a balance transfer fee this year. This move has probably helped to discourage balance transfer surfing by customers wishing to transfer relatively small balances, but these fees haven't stopped surfers with large credit card balances, as long term savings can still be achieved when transferring large balances, even when the destination bank or credit card company charges a balance transfer fee.

More recently, the One Card from Halifax has cut the interest free period associated with it's 0% balance transfer offer from 12 months to 3. Halifax also raised the "go to" rate--the annual percentage rate that's charged once the interest free period ends--with this card from 12.9% to 15.9%.

Nationwide Building Society no longer has an interest free balance transfer offer; the best you can do with Nationwide these days is a 4.9% balance transfer rate for 12 months.

Some credit card companies have also started to bring back annual fees to try and make up for lackluster profits.

On the U.S. side of the pond, changes related to balance transfers are happening, but not as drastically as in the UK. Many American credit card companies are now giving the credit consumer a choice: either a low APR (somewhere in the range of 2.99 to 8 percent) period until the transferred balance is paid off, or an interest free period on transferred balances for anywhere between 3 and 12 months. Good stuff. And Discover is still very aggressive with their 0% balance transfer offers; I got another offer from Discover in the mail yesterday with an offer to transfer my higher-rate balances to their Platinum card with no interest charges on the transferred balances until March of 2007! I'm not in the market for a credit card balance transfer right now, but I may take Discover up on their offer the next time I receive a hot solicitation from them.

Stay tuned for balance transfer news...

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