Not long ago you could have wall-papered a McMansion with all the 0% APR credit card offers going through the mail. Times have changed, and while the credit crunch of ’08 put a serious damper on those offers it looks like the Credit Card Act of 2009 may be the final nail in that coffin.
According to a recent ABC News article:
With a host of new legislatively mandated protections for credit card holders under the Credit Card Act of 2009 set for February 2010, the banking industry is already curbing “zero percent interest” introductory rates, and, in some cases, hiking one-time balance transfer fees.
This is a bummer for people like myself, who are responsible enough to make use of these offers to stop the clock on interest while they pay off their balance, but it may be catastrophic for the “credit shoppers” out there. These are the people who have been riding the 0% interest merry-go-round for years, all the while racking up new purchases on the balance being transferred.
The article profiles one such guy from Buffalo, N.Y. who got caught holding his hot potato of a balance when the APR shot to 15.9% after the initial 0% transfer rate expired. Now he may be stuck with the balance AND the high interest rate because credit card companies are no longer offering that next card for the credit shopper to jump to.
If such transfer offers do become available, they will likely have higher transfer fees than previously:
Hardekopf and other industry experts are noticing that one-time balance transfer fees, which used to be 1 to 2 percent, and in more recent years have been at around 3 percent, are going up: Bank of America has upped its one-time balance transfer fee from 3 to 4 percent while Chase has moved, in some cases, to 5 percent.
Cases like these really bring home how dangerous credit cards can be for people who lack the discipline to use them responsibly. Of course, that’s a large part of the population, and credit card companies have been making lots of money off those people and their irresponsible financial behavior.
That being said, I’m not one of those people who hate credit cards and think they’re something evil set forth by the devil himself. I think they can be a tremendous tool, but you have to know yourself well enough to walk away from a 0% balance transfer offer from a credit card company if you’re not going to pay off that balance before the rate resets.
Kewl… I found your site simply by happenstance. Like it very much and will bookmark it. I would also like to add a link to my site if you do not mind.
No… this is not a ‘bot.
Thanks again.
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