Where Are The 12 Month 0% No Balance Transfer Fee Credit Card Offers?
Published 9/29/08 (Modified 3/8/11)
The credit crisis is bumming me out. Because of the current economic recession, an important source of free money and money making opportunities has all but dried up on me and pretty much everyone else in the country. I'm talking about lucrative balance transfer credit cards - namely, the once abundant credit card terms and conditions that offered amazing 0% APR balance transfers for 12 months with no pesky balance transfer fees.
Ever since I first started getting into the world of personal finance blogging and common sense financial planning, balance transfer credit cards have always been one of my favorite consumer financial instruments. Balance transfer credit card arbitrage is actually what got me started with personal finance blogging���� to begin with. Over the years, they have served me well, netting me substantial balance transfer arbitrage profit in the way of high yield bank interest income, and cushioning me during difficult financial times by providing me a way to get quick interest free loans as a financially struggling young lawyer. During tough economic times in my life, they helped me bridge temporary budget shortfalls, saving me from having to turn to high interest risky alternatives like payday loans. My early life would actually have been more difficult and harsh had it not been for the safety net benefits and financial assistance provided by 0% balance transfer credit cards. During key moments in my life, these short term interest free credit card loans helped preserve my financial independence and saved me from having to turn to family for monetary handouts.
In The Beginning: The Good Old Days Of Lucrative 0% Deals For Credit Card Balance Transfers With No Balance Transfer Fees
Back in 2000 and shortly after the economic collapse that followed the terrorist attacks of 9-11, the U.S. economy ushered in a Renaissance period of sorts in terms of credit offers. During that period of time, lucrative and juicy pre-approved 0% APR, no interest credit card loan offers were simply everywhere - on college campuses, stuffed in mailboxes, and found everywhere online. Wanting to make sure they didn't miss out on their share of the very profitable credit card market, the major card issuers promoted all sorts of 0% APR teaser offers to attract new customers. The goal was to tantalize new applicants with introductory offers and ultimately turn them into long term cardholders and spenders. Eventually, this sparked fierce competition among the card issuers as each one introduced its own versions of the classic 0% balance transfer deal. The market competition led to great increases in the length of the promotional 0% period, rising from an initial 6 months to 12 months or longer.
Eventually, some cards even extended the 0% balance transfer periods indefinitely, leading to what ultimately amounted to a 0% balance transfer for life credit card offer. The only thing keeping the balance transfer tidal wave in check was the existence of balance transfer fees, usually set at the customary rate of 3% of the total amount transferred. However, with continued rabid competition, the credit card issuers eventually collectively waived the once pervasive balance transfer fees altogether. The elimination of balance transfer fees resulted in a credit card free for all. With no out of pocket fees or upfront costs to contend with, balance transfer arbitrage seekers eagerly ate up the ever expanding offers.
The tremendous wealth of balance transfer deals led to the rise of skilled balance transfer arbitragers and App-O-Ram'ers - individuals who ravenously sought out 0% balance transfer credit cards to make a quick profit (God bless capitalism at its finest). The credit card arbitragers would rapidly apply for as many 12 month 0% balance transfer cards with no balance transfer fees as possible within a very short period of time (hence the App-O-Rama nickname given to the process). By rapidly applying for a high number of card offers simultaneously, applicants would be able to greatly minimize the sequential credit hits on their FICO credit score, and preserve their ability to take advantage of future 0% balance transfer deals. The most hardcore of balance transfer arbitragers oftentimes would apply for more than 5-10 new credit cards at a time in rapid succession to complete the arbitrage cycle. With the 0% credit card offers in hand, the balance transfer applicants would transfer the credit card balances into high yield bank accounts to earn interest free money (thus enjoying full FDIC insurance coverage while earning stable bank interest income at the same time). Thus for the duration of the balance transfer offer (often at 12 months or longer), the App O Rama had the potential to allow the savvy credit card user to earn quite a bit of money by not doing anything more than taking advantage of free loan money at zero interest - the very definition of arbitrage, which is the process of taking advantage of an inefficient imbalance in market equilibrium.
Today: The Housing Collapse, Subprime Lending, and The Credit Crisis Have Ended The Era Of Easy Balance Transfer Money
One could argue that the period of amazing credit card offers during the early part of this decade was actually a disaster in the making - the unsustainable spark that triggered an out of control credit market that would ultimately consume the entire financial investment banking sector, conclusively wiping out pillars of American investment and banking might such as Bear Stearns, Merrill Lynch, Countrywide Financial, Washington Mutual, and Wachovia Bank. With the way the credit markets are now, it's unlikely the glory days of awesome credit card offers will return anytime soon.
With the housing market implosion came credit defaults and ultimately the closing of the credit lending spigot. As the economy and housing market has tanked, personal bankruptcies and defaults on credit card payments have risen sharply, causing credit card issuers to panic, and drastically scale back credit card offerings. Major credit card companies have all pretty much stopped waiving the 3% balance transfer fees imposed on all transferred card balances. Many card issuers have even eliminated the maximum cap on the balance transfer fee levied, rending many balance transfer offers essentially useless for profit seeking arbitragers. With a 3% balance transfer fee with no maximum limit, those who transfer large balances face the prospect of having to pay extremely high fees - making these offers substantially less attractive than they once were.
These days, the credit landscape continues to change. So long as we continue to be mired in this catastrophic credit crisis, the existing terms and conditions of current credit card and balance transfer programs are unlikely to greatly improve anytime soon. While the credit crisis has pretty much put a severe damper on balance transfer arbitrage activity, those who seek out 0% credit card offers for financial assistance reasons are still in luck. Because of the extreme profitability of the credit card industry, such offers have not completely disappeared. Major credit card issuers know they must continue to attract new credit card applicants and consumers through the dangling of attractive zero APR carrots. While credit card seekers ought to know that such offers are getting much harder to find, they are still around - you just have to know where to find them. Those who want to maximize their zero balance transfer limits to either make money on balance transfers or use them to pay off high interest credit card debt need to adopt more creative approaches such as using multiple cards or extending periods by applying for new offers as old ones expire to keep the 0% rate going. Of course, this is all highly prerequisite on maintaining a stellar FICO credit score. Anything you can do to raise and boost your FICO score will help you in the long run in terms of qualifying for balance transfer credit card promotions. Be sure to monitor your FICO credit score for free.
Currently, most of the available offers are not as lucrative as they once were, with shorter introductory periods, and the imposition of balance transfer fees, but fortunately many fees are often capped with a maximum limit. For those transferring large 0% credit card balances, paying a fixed maximum amount of $75 or so is likely worth the interest savings. For those searching for balance transfer deals, the following may interest you:
- My complete list of all updated 12 month 0% balance transfer credit card offers available in the market.
- All available 6 month and 12 month 0% balance transfer credit card offers with no balance transfer fees.
- My personal recommended selection of the best balance transfers for money making and emergency fund purposes. These cards are the best in my opinion based on my evaluation of term conditions and capped fees. Many of the cards even offer 0% introductory APR for credit card purchases.