Credit Cards

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Wednesday, September 15, 2010

Will 0% No Balance Transfer Fee Credit Cards Return?

Discover More Black CardAs you might have already guessed, American banks are not jumping for joy about the new the Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the Credit Card Act. The new law, together with new rules imposed on banks by the Federal Reserve in August of 2010, place limits on fees and other charges and, in general, make having a credit card in your wallet a much better financial arrangement for you.

If you think that banks have responded to the new credit card rules by coming up with creative ways to generate revenue, then you're right on the money.

For example, banks are no longer permitted to charge inactivity fees. However, some banks have figured out a clever way around this rule: charge an annual fee that's waived if the cardholder spends a certain amount on his or her card each year.

So what about 0% credit cards that don't charge a balance transfer fee? These offers were extremely popular during the pre-financial-meltdown credit boom, but they disappeared as the shockwaves from the 2008 banking crisis rippled through the American economy. "No fee balance transfer" cards still exist, but current offers from reputable banks don't feature the added benefit of a zero percent introductory annual percentage rate (APR) on transferred balances.

When will zero percent intro APR no fee balance transfer cards return to the American market? Nobody can say for sure, but it's a pretty safe bet that they will return eventually. Banks need time to figure out how to make credit cards as profitable as possible without breaking any of the new credit card rules. That might take many months, or even years. Moreover, don't expect these specific offers to return until the American economy is expanding at a decent pace, and sustainably.

Credit cards are still extremely useful financial tools that offer great benefits like purchase protection and cashback rewards. What's true now has always been true about credit cards: pay attention to the terms and conditions before signing on the dotted line, and do your best to avoid finance charges. Competition in the credit card market is still very healthy, so if you don't like the deal your current bank is offering, you can always pass and signup for a card elsewhere.

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