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Banks Change Balance Transfer Cards: Tightening Screws• Click here to view all Articles... • Click here to view Credit Card eZine Archive... |
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It is a common knowledge that balance transfer credit cards help to eliminate old annoying debts. These days, credit card industry experiences some changes. And it is no wonder, as such factors as recession and inflation make credit card companies amend their products to save their profits and place on the market. Balance transfers are extremely popular; so many consumers would like to know about the changes in the supply of these bank products.
One if the most attractive features of a balance transfer plastic is low, or better, zero balance transfer fee. In a combination with low interest rate, this feature adds much to appeal of the plastic. That is why people go on applying for balance transfers, in the hope of paying out the debt on beneficial terms.
However, there is sad news for balance transfer addicts: the majority of banks have abandoned cards with no BT fees. Fees are here to stay, so the cost of a balance transfer transaction has become tangibly higher. Thus, today you will have to pay about 3% of the balance transferred, depending on the issuer. What is more, the caps on the amount charged as a fee were also cancelled.
Of course, a lot of consumers will get rather upset, since the non-stop balance transferring is a way of living for them. Personal finance experts say there is a positive effect of total introducing of fees. If a consumer overdoes it with balance transfers, it inevitably leads to damage of his/her credit score and in many cases does not resolve the problem of debt.
The fact is that people get used to balance transferring routine and sometimes do not realize that they cannot eliminate their debt, making it larger instead. So, experts hope that by this innovation banks quite unintentionally will keep people off balance transfer addiction.
It never rains, but it pours, they say. So, changes in terms of credit card offers come together with banks' requirements to the applicants getting stricter. Consumers with good credit are preferable for the banks, while plastics for limited and fair score are provided with higher APR and fees than before.
Can we learn a lesson from all this? Obviously, yes. Some years ago, an American consumer could not apply for a balance transfer credit card: there were none such plastics. You could only do with intro periods with as much as 2 - 8% APR.
Credit card companies had been struggling hard for the customers, so such amenities as balance transfer and rewards have emerged. What's then? We have been using the extra beneficial credit card deals which sometimes enabled us to pay off balances almost for free. But, America is deep in consumer debt (mainly credit card debt) and recession adds to the market crisis. Probably, it is high time to learn wise spending and reasonable usage of credit.
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