Great Balance Transfer Credit Card Offers Are Back

By Michele LernerCardRatings.com

Credit card companies are now offering balance transfer credit card offers that seem as if they're from 2006.

Balance transfer credit card offers had dried up as regulations put in force by the 2009 Credit Card Accountability, Responsibility and Disclosure (CARD) Act limited card companies' discretion in changing interest rates on cardholder accounts. The CARD Act required promotional rates to remain in place for at least six months, and many credit card companies compensated for the longer promotional rate period by charging a balance transfer fee.

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Perks that used to be standard--such as no-fee balance transfers or long introductory periods with 0 percent interest--soon vanished.

Return of no-fee balance transfer card offers

Credit card companies seem to be tentatively offering balance transfer deals once again. Among these deals are no-fee balance transfer credit cards and balance transfers with a zero percent APR for an introductory period of 24 months.

Discover is leading the way with two promotions for cards in its Discover More series:

  • The Discover More credit card with no balance transfer fee allows you to transfer a balance with zero percent interest, then carry that balance for 12 months with no additional interest accrual. After the first year, the APR rises to 11.99 to 20.99 percent, depending on your credit history. Customers are not charged an annual fee for this card.
  • Alternatively, there's the Discover More 24-month promotional balance transfer. By qualifying for this credit card, you'll pay zero percent interest on your transferred balance for 24 months. While no annual fee is charged for this credit card, you will pay a 5 percent balance transfer fee. But this upfront fee could be well worth two full years to pay down credit card debt without it growing further.

Choosing balance transfer cards for your finances

What kind of balance transfer credit card offer is best for you--no-fee or long promotional period?

If you have a smaller balance--one that you can confidently pay down within a year--you probably want to skip the balance transfer fee and opt for a shorter 0 percent balance transfer introductory APR. A $2,000 balance accruing no interest can be repaid in one year by paying $167 per month. If you can handle that repayment schedule, there's no need to pay the 5 percent fee for a balance transfer.

On the other hand, you may have a large balance that can't be paid off in 12 months. In that case, it can be advantageous to pay a 5 percent balance transfer fee to get the longer 24-month zero percent APR period.

For example, let's say you have a $20,000 balance and can only repay $600 per month--not nearly enough to get rid of the full balance within 12 months. You'd come out ahead after two years by paying the initial balance transfer fee to receive a 2-year paydown period with no interest.

If you have a balance you want to pay off and can commit to reducing debt rather than racking up more, then a balance transfer credit card may be just the tool to help you do that. Credit card offers come and go, and there's no guarantee that deals like the Discover More card promotions are going to be there for long. Compare credit cards to find the balance transfer terms that work for your financial situation.

The original article can be found at IndexCreditCards.com:"Great Balance Transfer Credit Card Offers Are Back"

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