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 @

Sunday, September 30, 2007

I Paid A Fee, Willingly, for Transferring A Credit-Card Balance

Balance Transfer Fee
Balance Transfer Fee
For obvious reasons, the most popular credit cards recommended at this site are those which offer a 0% intro APR on balance transfers for at least 6 months and don't charge a fee for transferring balances. So you may find it surprising that recently, I willingly paid a fee to transfer a balance, even though I could have easily qualified for a quality credit card that doesn't charge a fee for the privilege.

The reason I willingly paid a fee? Because, in my situation, it was worth it.

My business credit card debt was a bit high for my tastes (~$7,000) and, even though I could have paid the balance down to zero within 2 billing cycles, I wasn't interested in using up a large percentage of my free cash to clear the debt. The best solution, I thought, was to transfer the balance to a new business credit card with an attractive balance transfer offer and the best possible, fixed "goto" rate, then pay down the balance over 4 or 5 billing cycles.

I chose to transfer my business credit card balance to the Chase Premier Cash Rebate card, and I did so via an unsolicited offer I received in the mail! Critical offer details were:

  • 0% Intro APR on new purchases, balance transfers and balance transfer checks for 12 months.
  • Purchase APR (the "goto" rate) of 9.99% fixed.
  • Balance transfer fee: 3% of transaction, with a minimum of $5 and a maximum of $99.

Here's why I chose this card:

  • I've been yearning for a business credit card with a low and fixed interest rate (my idea of low is below 10% APR) for many years now. I like business credit cards because they afford me an attractive level of anonymity when I do business and shop online, and because they really do a great job of building the credit rating of my business. I applied for a similar Chase business credit card about 2 years ago, and that application was rejected even though my personal and business credit rating was good. I was disappointed, but not totally surprised by the rejection, because banks are very careful when it comes to business credit cards (unsecured debt) that have a very competitive interest rate.
  • Even though I really don't like the idea of responding to unsolicited mail (the idea is anathema to me, almost as bad as responding to a spam email message, in my opinion), I had to make an exception for this card. As soon as I received the latest iteration of this particular offer (I get unsolicited business credit card offer from Chase about once per month!) I scoured the Internet to see if I could find the same deal online. I failed. The lowest goto APR for a Chase business card I could find online was 11%, and that was variable. I already have a business credit card from both Citi and Bank of America. I used to have a Capital One Business credit card, but I canceled it long ago because the credit line was wimpy ($500) and they wouldn't increase it. The Advanta Platinum Business Card with Rewards Options card was very, very tempting, with a 0% intro APR on balance transfers for 16 months, and a goto APR of Prime minus 0.26%, but the goto APR is variable, and there's no 0% intro APR for new purchases.

    Bottom line: big credit card companies often reserve the very best offers for the solicitations they send out to well-qualified, prescreened consumers.

    Actually, what I hate most about those wasteful credit card solicitations is the fact that they are the reason why identity theft is so prevalent these days. Many banks like to cast a very wide net so as to generate as much business as they can, but this tactic ends up making it easy for the crooks to get hold of our sensitive information. You can elect to opt out, of course, but I choose not to, because these offers are often the best deals around. So, yeah: I have a true love/hate relationship with unsolicited credit card offers. Of course, I have a very powerful and efficient shredder, so I can shred all the discarded offers 10 at a time.

    I sometimes wonder: if my mailbox was on the street and easy to access, would I be wrestling with a serious identity theft situation right now? It's the stuff of nightmares!
  • After years of taking advantage of 0% deals in my never-ending quest to pay as little interest as possible, I now find myself loaded up with more personal credit cards than I need, and I don't want to add another personal card to my collection. Furthermore, canceling one or more of them would likely cause my personal credit score to drop, and I don't want that. I've worked hard to eliminate my personal credit card debt and simultaneously get my credit score to a happy place (my TransUnion score is 813 now) and I don't want to do anything to mess it up (I'm planning on buying some property in the not-too-distant future.)

So, as of right now, and thanks to a recent credit line increase on my Citi® Business card, I have $40,000 of unsecured credit available to me for business spending. Furthermore, I now have a business card with a low, fixed APR that I can use for all my temporary financing needs. So I am quite pleased...for now. Depending on how things go, I may signup for that sexy Advanta card in the future.

If you like 0% offers, then check out those unsolicited snail-mail offers at least once in a while. And make sure you have a good shredder.

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Saturday, September 15, 2007

New Card Added: The Home Advantage World MasterCard

Citi® Credit Cards
Citi® Credit Cards
Recently added a new Bank of America card: The Home Advantage World MasterCard® with WorldPoints® Rewards. This card is similar to the Citi® Home Rebate Platinum Select® MasterCard in that accumulated rewards dollars are used to pay down a cardholder's mortgage balance.

I like these two cards. As long as the cardholder can pay his or her entire balance in full at the end of each month, these cards can really help homeowners improve their mortgage situation and, by extension, their finances in general. By paying down a mortgage balance with extra payments, or in this case with accumulated rewards dollars, homeowners can:

  • Build home equity faster. This is crucial in the current U.S. real estate environment. The more equity you have in your home, the less likely you are to run into problems if at some point you want to sell, refinance, or get a second mortgage (a home equity loan or a home equity line of credit.) FYI: a number of experts have recently predicted that the American real estate environment won't improve until 2009.
  • Lower the total amount of interest that will be paid on the loan. If you take the example of a $250,000 mortgage with a 30 year term and a typical interest rate, the savings can be in the many thousands of dollars. It's amazing how these things add up over time!
  • Payoff a mortgage faster. This is optimal for anyone with a mortgage, but especially optimal for homeowners who plan on using the equity in their home to help fund retirement.

Currently, the fee for transferring credit card balances to the Bank of America Home Advantage MasterCard is 3%, with a minimum of $10 and no maximum. However, the card offers a 12 month, 0% Introductory Annual Percentage Rate (APR) on Balance Transfers and Cash Advance Checks.

With the Citi® Home Rebate card, you can transfer credit card balances at 0% Intro APR for 12 months, and, currently, you don't have to pay a balance transfer fee for the initial balance transfer.


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