Transfer Your Credit Card Balance low interest offers Cheap credit is making a comeback, at least for some customers: Big banks and credit card companies are ramping up their 0% interest rate offers again.

Bank of America (BAC) is offering to some customers 0% interest on cash advances and balance transfers through June 2012. J.P. Morgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) are making similar offers, according to Bloomberg.

If this feels like a flashback to pre-recession days, it should. But the game has changed in key ways since 2006: There are more fees and tougher credit score thresholds.

The upside for qualified customers is that fierce competition between credit card issuers means promotional rates will last longer. Some, like Citibank's Citi Simplicity credit card, have 0% interest on balance transfers for up to 21 months.

Going Low As a Safe Bet

Zero-percent offers are a good way for card issuers to add new customers while managing their own exposure to risk, says Greg McBride, senior financial analyst at Bankrate.com. With transfer fees now between 3% and 5%, credit card companies can make a small profit right away, which can offset the loss of revenue during the 0% period.

Another factor that's driving the low-interest lending trend is the feeling within the card industry that all the regulatory changes stemming from the Dodd-Frank Act and the Credit CARD Act have been now put into place, said Ben Woolsey, director of marketing and consumer research for CreditCards.com.

"They are feeling much better these days," he says, "and that is reflected in how aggressive they are being with promotional rates and direct-mail offers."

Doug Miller, senior analyst for banking and cards with Corporate Insight, says the zero-percent balance transfer offers never actually vanished, but what is different in the recent wave of offers is that the teaser rates extends to new purchases as well.

And of course, credit card companies are hoping that new customers will stick around long after the great introductory rate goes away, and perhaps also nudge up their spending under those temporary low rates amid the distant ring of holidays bells.

Who Can Qualify

Current low-rate offers are aimed at customers who already have credit scores from 730 to 750 and above. Anyone with a FICO score lower than of 700 is unlikely to qualify for these promotional deals, says Curtis Arnold, a credit card expert for CardRatings.com.

Consumers who are struggling to manage debt and have impaired credit histories likely won't be able to tap these offers. In fact, applying for one without the right credit profile could even hurt your credit score -- you get dinged when you're declined for a new card. (One tool for finding a good match between your credit score and available card offers is with the card statistics search engine at CreditKarma.com.)

Use Low Rates to Pay Off Debt

For those who qualify, not all deals are created equal. It's vital to examine all the details of an offer. Much the key information can be found in the Schumer Box, a table of fees, terms and conditions that required by law for every credit card.

First look for the teaser rate, which hopefully will be 0%, and then what the rate will jump to when the teaser period ends. For many cards, the "go-to" rate rises to anywhere between 11.9% and 20.99%.

Next, look at the length of the teaser offer. Many products offer far more than 12 months: Some are in the 15- and 18-month range, and a few last up to 21 months. Make sure you clearly understand the terms and caveats: Often, you can lose the promotional rate by being late on a single payment.

Calculate the fees. Balance transfer fees are hovering around 3%, but some are as high as 5%. Online calculators provide an easy way to calculate costs and savings benefits of making a balance transfer. For example, a balance transfer of $8,000 with a 3% transfer fee adds up to an extra $240 on the debt. By using the 21-month promotion to pay down the entire dent, that new total of $8,240 can be paid off with payments of $392.38 a month.

Compare that to keeping that same $8,000 balance on a card with 12.9% interest. To pay it off in the same 21 months would require payments of $427.60 each month. That's a savings difference of more than $35 a month, and almost $740 overall.

Convenience checks offered by some credit card lenders might appear like a good way to get a short-term, interest-free loan but those typically also come with a 3% to 5% fee, says Woolsey. That limits the opportunity for enterprising customers to borrow from a credit card and invest the cash in an interest-bearing deposit account or CD to make a little money on the margin.

If moving a balance to a new card makes financial sense, credit card experts advise against closing the old account, especially if it's one you've had for a long time. Maintaining a lengthy credit history is key to keeping a solid credit score.

However, finding the lowest rate for the longest term possible is only the first piece of the puzzle. The second, more important step, is to actually use that low rate to facilitate paying off your debt.

"Use it as a tail wind to repayment," says McBride.





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thurd59

the credit card companys and banks have great scams going this disibility insurance they peddle i became totaly disabled filed for my insurance benifits they drag there feet for four months refuse to send any forms to apply for service then say well now that your cards went into default you cant acsess this service now only one we were able to go after was capital one filed class action against them settled in 17 days for 50 million dollars to avoid criminal charges bilked consumers out of 10 billion dollars settled for 50 million 25% to attorneys 25% to those signed on 50% divided amongst 3.5 million people defrauded by company i was told by hsbc and bank of am. my disibility didnt qualify but im on ssdi so i qualified for that banks credit card companys nothing but crooks boy i wonder why there are occupying wall street

October 17 2011 at 12:45 PM Report abuse rate up rate down Reply
franklyn2

The media, either out of ignorance, or to perpetuate the sucker culture which is now under fire, is peddling the notion that banks are offering zero interest rates on consumer loans. To lend money, and collect money up front, whether you call it fees or interest, is a financial gimmick that people are gradually begining to understand in these times. All the so-called "zero interest transfer balances" being offered carry a discount rate collected up front, in effect increasing the yield to the Lender. So Media, please educate the people, and stop being a tool of the bright boys running the banks.

October 17 2011 at 11:07 AM Report abuse rate up rate down Reply
ddix723604

Most credit card companies should go jump in a lake.

October 16 2011 at 3:45 PM Report abuse +1 rate up rate down Reply
Michael

Be careful: do not transfer your balance if your interest rate is lower than the transfer rate !! Seems obvious, but people can be duped !!

October 16 2011 at 12:57 PM Report abuse +1 rate up rate down Reply
1 reply to Michael's comment
evd10

Only a finacial wizard could offer this advice.

October 17 2011 at 10:45 AM Report abuse rate up rate down Reply
ernie

I am one of the 99%, I worked hard all my life. Right now I make $15.00 an hour, but because I have been responsible and smart, over the years I was able to buy and hang on to a house and acreage that is now worth over $300, 000.00. It wasn’t easy, there were times I ate beans and baloney for dinner, drove a $500.00 car, at times worked two jobs, struggled through several recessions, to hang on to it. During that time I watched spoiled brats on the news protesting, demanding the same thing I have without working for it. People tell me how lucky I am to have what I have, LUCK HELL! I worked my ass off for this. Using credit cards, credit card systems and credit carefully and responsibly was a huge asset to accomplishing all this. Then there are those that think that because I have “so much” that I should give them some of it. Oh- how offended they get when I tell them to go work for it like I did.

October 16 2011 at 12:09 PM Report abuse rate up rate down Reply
Judith

I let my bank know I knew about this -- they lowered the interest rate on my credit card by three-fourths and would have gone to 0% had I opted out of the rewards program, but I chose to not opt out. Banks do have the power to negotiate but most people don't actually realize that. I had also, a year ago, negotiated a better rate on my roll-over CD. Go for it!

October 16 2011 at 11:51 AM Report abuse rate up rate down Reply
lbsurfettes

Since the requirement to getting one of these new offers is having a good credit rating, you will leave out the 99% by default?

October 16 2011 at 11:34 AM Report abuse rate up rate down Reply
noadmail

They took the stimulus, then raised interest rates on credit cards so people could not pay them down and would be stuck with extortionistic fees and charges. The 700 to 750 credit score requirement for 0% interest is a scam. People with those scores generally don't need that rate and so banks know as a percentage that very few will take advantage of this option. Furthermore they won't tell you that you need that kind of score to get those low rates. They would rather see people get beaten down with rejections and even lower credit scores so they can continue to enslave people with their extortions
Kill your credit cards, rid yourself of banks as much as possible, and join the protests

October 16 2011 at 10:57 AM Report abuse -1 rate up rate down Reply
wendylile

Credit card companies have offered 0% rates for years; it's the transaction fees that have gone up. Now, they are at about 4%. However, I received an offer for 1% which I took.

October 15 2011 at 11:32 PM Report abuse rate up rate down Reply
n1k2r3

They all laughed when I told them about FICO....in Sweden, that is. I told the executive bankers and CEO's in Stockholm about the American system of borrowing money based on a credit score. They said that they were aware of the strange and ridiculous measurement of our borrowing methods. In Sweden credit is extended to one WITH MONEY. THEY DO CHECK IT OUT PRIOR TO ANY LOAN> not a promise to pay based on a score. We all know persons who have "good credit" and very little money. We also know those who have "poor credit" with lots of money who simply do do want to let go of it. Go figure.

October 15 2011 at 1:52 PM Report abuse rate up rate down Reply
1 reply to n1k2r3's comment
evd10

There are two reasons that bankers like credit scores. The first is that credit can be approved quickly using one easily obtainable number. The second is that they can not be accused of discrimination if they simply eliminate all borrowers below a certain credit score. Actually I don't think that either method is foolproof. People with high credit scores can have lower ones tomorrow and people with money can have none tomorrow. But I don't think you can compare Sweden and the United States in any case. Sweden's population is homogeneous and the United States' population is heterogeneous.

October 17 2011 at 10:43 AM Report abuse rate up rate down Reply