No fee balance transfer credit cards: What made them extinct?

Cynthia Stewart
May 16, 2007
View Author Bio
Digg It Del.icio.us
Furl It Reddit
Google My Web


What happened to those wonderful balance transfer offers with no fees and why can't you find a single such offer despite scouring the database of every single online credit card website? The answer isn't difficult to find. Such offers have been exploited by people to defer their repayments and shelve themselves from high interest rates. In fact, this practice became so widespread that credit card companies were forced to rethink on the issue.

Earlier, it was very easy to find credit cards which allowed to transfer balances without any fee what so ever. These credit cards came with 0% intro APR for a specified period like 6, 12, or 15 months. This was used as a goldmine by those with large outstanding balances. They would simply transfer their balances to such credit card and get rid of existing high APR's. The 0% intro offer would then be exploited by them. Just by paying the minimum balances they would stay in the good books of credit card companies, and when the 'golden period' of0% intro APR was nearing its end, voila they shifted their huge balances to another credit card with similar offer.

So, this resulted in loss of revenue for credit card companies in terms of interest rates, but a more disastrous consequence of this process was that the credit card holder was increasingly getting into huge debts.

A major issuer of such no fee balance transfer credit cards, Morgan Stanley with their range of Discover credit cards, took strong exception and withdrew all such offers. Now they decided to take a certain percentage on balance transfers. To counteract such measure the credit card companies now have a different APR for balance transfer, this includes credit card with 0% intro APR.

Game the system and the system will game you. Nothing applies more truly to this particular practice. The credit card companies have retaliated with their new terms and rates to stop the trend of transferring balance and avoiding high APR's. Days of such unhealthy credit card practices are now over, unless some new credit card company comes into the game and decides to capture the market with such 'lucrative' offers.