0% Balance Transfer Credit Card Offers and Alternatives
Published 7/16/09 (Modified 12/17/13)
As the economic paddy wagon continues to hee and haw its way through the recessionary mud, once available avenues of emergency funds are steadily drying up. Credit card consumers and account holders across the nation may have noticed that they are receiving fewer credit card junk mail in their mailboxes these days. While this reduction in the volume of paper junk mail received may be counted as a blessing, it's also a sign that the once bountiful availability of lucrative 0% APR credit card offers are slowly coming to an untimely end. Due to the deterioration of the mortgage and credit industries, major credit card issuers such as Citi Card, Chase, Bank of America, American Express, and Discover have significantly pulled back their credit card marketing efforts and drastically reduced the quantity and quality of introductory 0% balance transfers offered. Some 0% balance transfer offers that are still available are listed below.
Currently, the most popular 0% balance transfer card offers that still remain in effect today include the following short list of active promotions. As always, before applying for a balance transfer card, it's important to read the fine print carefully and be fully cognizant of the advertised 0% rate duration, the availability of any balance transfer fees, the regular interest rate after the end of the 0% period, and the availability of any underlying cash back or credit card reward offers.
- Slate from Chase : 0% introductory APR on balance transfers and purchases for 15 months, and no balance transfer fee on transfers made within 60 days of account opening. All other transfers: Either $5 or 3% of the amount of each transfer, whichever is greater.
Disappearing Balance Transfer Credit Card Offers Due To Changing Times
In response to the market trend of vanishing balance transfer deals and low interest credit card offers, it certainly doesn't help that we currently have an anti big business leader at the helm in President Barack Obama. With the passage and issuance of new credit card rules and more aggressive federal regulations designed to crack down on the more unethical credit card issuance practices, the new rules are now making the business practice of providing 0% APR durations extremely unprofitable for the major credit card issuers - and threatening to push the remaining 0% balance transfer offers to the brink of extinction.
During the glorious heydays of credit card arbitrage and App-O-Rama's, it was easy for most Americans to count on the availability of 0% balance transfers for cheap personal loans and low interest debt consolidations. Only a mere few years ago, those saddled with a mountain of high interest credit card debt could simply leverage their good FICO credit scores and apply for new credit cards that offered 0% balance transfer promotions as a short term way to consolidate their oppressive debt into a zero percent account for 12 months or more while they slowly chipped away at the payment principle. If after the conclusion of the one year duration the consumer needed to extend the 0% balance transfer consolidation period, the cardholder could simply seek out another interest free credit card and transfer the unpaid balance over to the new zero percent account.
Now, those days are all but gone as credit card issuers have had to drastically cut back on their offerings to comport with economic realities and standards brought on by new, tougher governmental rules on lending practices. Back during my earlier student days, I was one of those individuals who actively used balance transfer credit cards to keep my personal budgets afloat. Now, if I were to ever encounter the same cash strapped conditions again, I would have to resort to using balance transfer consolidation terms that aren't as favorable as they once were, or seek out alternatives to credit cards altogether. Major balance transfer issuers that once dangled lucrative free balance transfer promotions of 12-18 months, with no balance transfer fees or fees capped at $75 or $99, with some that even offered attractively cheap lifetime balance transfer terms - are now witnessing the complete pull back of these former offers. Today, while a handful of low interest 12 month 0% balance transfer promotions remain, most card issuers now require some upfront balance transfer fees, have shorted 0% credit card transfer rate durations to an average of 6 months, and have pretty much withdrawn most of the sign up incentives that used to exist just a few years ago.
Those like myself who have grown dependent on 0% balance transfers and low interest credit cards as sources of emergency funds need to start bracing ourselves and preparing for the slowdown effects of credit card consolidation loans (for those who have not already done so). With national unemployment rates almost certainly to exceed 10% and banks and lenders still fumbling with the credit crisis, it's important to figure out contingency options in case of unexpected personal finance emergencies. Those who are currently relying on balance transfers to help pay down high interest credit card debt also need to know what other balance transfer alternatives are out there. You never know when you or your family may encounter a sudden reduction in income stemming from an out of the blue layoff or unexpected illness on the part of the head bread winner. We are currently in difficult times - it's best to stay prepared.
As always, maintaining a good credit score is essential to keeping that dwindling balance transfer pipeline open. Securing a high FICO credit score is also highly relevant to the accessibility of the litany of balance transfer alternatives out there as well. If you make it a habit of making late payments or neglecting your existing debt account obligations, your credit report history will suffer - closing the door on the secondary loan consolidation options that may have been available to you.
List Of Credit Card Loan Consolidation and Balance Transfer Alternatives
If your attempt to take advantage of available 0% balance transfer offers or negotiate lower interest rate terms with your current credit card company have failed, you may wish to consider these plausible loan consolidation alternatives.
1) Introductory 0% Credit Card Balance Transfers: Obviously, before finding alternative loan solutions, the first step is to make sure and confirm that you've truly exhausted the list of available balance transfer offers to you. If used diligently with timely and proper adherence to minimum payment rules, zero percent credit cards are the easiest available method to consolidate high interest debt. Some of the issuers even provide balance transfer consolidation checks that can be used to directly pay off non credit card debt as well.
2) Lifetime Balance Transfer Credit Cards: In the old glory days of balance transfers, there were such things as lifetime 0% balance transfers. Obviously those days have past. Nowadays, the zero percent lifetime balance transfers have been replaced with low interest life-of-the-loan type deals. For card customers trying to pay off high interest credit card debt, these new lifetime low interest balance transfers may be substantially cheaper than the other personal loan alternatives out there. In the past some issuers like Discover Card, at one time, offered lifetime balance transfer rates as low as 0.99% APR to 2.99% APR. Of course, while lifetime balance transfer credit card rates may be cheaper than other personal loan alternatives, they do require the card account holder to exercise super diligent repayment habits to continuously benefit from the perpetually low rates. Failure to do so will result in a figurative whack over the head by the issuer in the form of substantially higher rates and penalty fees.
3) Lending Club - And Other Popular Peer To Peer Online Personal Loans: For those with less than stellar FICO credit scores or credit reporting histories, online peer to peer lending services have emerged as viable balance transfer and personal loan alternatives to traditional banks. The leaders in this new and emerging industry are presently Lending Club.com (see my Lending Club review for more of my personal insight into the company's operations) and Prosper.com. Peer to peer services like Lending Club (or P2P lending as it's commonly known), offer a way for ordinary Americans to lend to their fellow man and woman by way of an online matching system - complete with personal profiles and blog messages written by prospective borrowers. By making use of credit scores, credit reports, debt usage ratios, and income & asset verification details, services like Lending Club allow prospective ordinary lenders like you and I to determine the risk level for the loans they extend and the appropriate interest rate compensation for that risk.
4) Secured Credit Card Debt Consolidation Via Home Equity Lines of Credit: In many state jurisdictions, those who own their own homes can open up a home equity line of credit (a HELOC loan) via a bank, and use the built up equity to pay off and consolidate their existing credit card debt. In almost all cases, a HELOC loan offers a much lower interest rate than most personal loans via banks or ordinary non-promotional credit card offers. However, this option is a very controversial alternative to credit card balance transfers as it basically entails the legal shifting of unsecured personal credit card debt - and turning it into a debt that is now secured by one's home. This distinction is important, because ordinarily in the event of a failure to pay back the credit card loan (a credit card default), the card issuer can not immediately go after your home to satisfy the unpaid debt. But once the debt consolidation is made via a HELOC loan, this turns the unsecured credit card debt into one that is secured by a condominium or single family home, subjecting the home to possible seizure for non payment. Utilizing a home equity line of credit loan for short term credit card relief is rarely a good idea, but it's an option and balance transfer alternative nonetheless.
5) Personal Loans Via Banks and Local Credit Unions: Those with good to excellent FICO credit scores may be able to apply and get approved for a personal loan from their local bank or community credit union. However, bear in mind that while these type of loans for credit card consolidation purposes are generally widely available to most borrowers, they frequently demand interest rates that are higher than available home equity line of credit solutions. Furthermore, oftentimes before banks or credit unions will extended such personal loans for existing credit card debt consolidation reasons, they frequently require the borrower to close out his or her existing credit card accounts to ensure that further debt is not accrued.
6) Debt Consolidation Counseling: If your credit score or credit report history is simply too damaged to utilize the available low interest credit card debt consolidation alternatives above, you may be able to seek out affordable credit counseling services from accredited non profit organizations to help you consolidate your existing debt in a manageable way via fee waivers and lifestyle changes. Many colleges, universities, military bases, veteran organizations, community credit unions, and even local government consumer protection authorities operate such non profit credit counseling programs. Of course, keep in mind - just because an organization touts itself as "non-profit", there's no clear cut guarantee that the services are free, affordable, or even legitimate. Beware of hidden fees or suspiciously high up front charges by the so-called non profit credit and debt counseling services. Those looking for a list of credit counseling agencies provided by the U.S. Department of Justice for various state jurisdictions may want to check out this approved agency list. It's a good starting point for those who need debt repayment help.
7) Payday Loans (Or Car Title Loans): This balance transfer alternative is the most controversial of all. I only offer it up here because it is a potential option for those seeking an alternative to credit cards, albeit an extremely costly one. Payday loans or cash advance loans provide people with a quick infusion of cash when all other immediate options have failed. Car title loans are simply payday loans that are secured by your car, subjecting your vehicle to possible seizure if you fail to pay back the loan. For those with poor or damaged credit scores, payday loans are frequently the only loan options available. With nothing more than a verified pay stub and a job, borrowers can secure a quick personal loan to pay off emergency bills such as home utility charges, car repair fees, or even credit card bills. Unfortunately, the easy accessibility of payday loans and the lack of any substantial credit history documentation needed to get approved also explains why they are so incredibly distasteful. Payday cash advance loans frequently charge the highest and most outrageous fees of any type of loan out there. I highly advise readers to stay away from high interest payday loans if possible. If you absolutely must play with fire, only borrow as much as you can afford and pay the loan back as soon as possible without delay.