News From Down Under: Transferring Balances May Hurt Your Credit Rating

I recently came across yet another term coined to describe those of us who like to take advantage of 0% credit card balance transfer offers: the "balance transfer surfer." Hmmmm...Do I like this new term? Yes, I think I do! Much better than "rate tart."

In Australia, Baycorp Advantage managing director Andrew Want warns that "balance transfer surfers" who transfer their balances too much may be doing harm to their credit rating. Click here to read the full story.

What does this mean for the rest of the world? Are credit reporting agencies in the United States going to start downgrading people's credit ratings for taking advantage of too many balance transfer offers? It's a possibility, but I don't think that would make sense, and here's why: just because some folks like to save money by transferring credit card balances, doesn't mean that these consumers are a credit risk, plain and simple. In fact, folks who like to take advantage of balance transfer offers are typically the sort of people who pay very close attention to their finances; these are the people who pay all their bills on time and have ambitions of someday having a FICO credit score of 850+. In other words, "balance transfer surfers" should be rewarded for their financial savvy, not penalized, and according to research I've come across, your FICO score most likely will experience a small increase if you transfer a credit card balance, especially if you transfer a balance to a credit card that has a relatively high credit limit (this is because you'll appear to be less "maxed out.")

And here's another reason: balance transfer offers are good for the banks and credit card companies. Egg, an Internet bank based in the UK, recently reported that it has become profitable thanks to the business they've gained by offering attractive credit card balance transfer offers. So if the banks, with all their vast resources and lobbying power, were to push for some sort of balance transfer credit rating penalty, they would in fact be shooting themselves in the proverbial foot.

So, fellow Americans, keep on transferring those balances! Just remember to pay attention to all the fine print so that you can be sure that you're making the right move. You don't want to end up transferring your balances to a credit card that has an interest rate that's higher than 19% once the 0% balance transfer period ends.

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0% "Forever" Balance Transfer Offers: Are They For Real?

At some point, you may have received a rather unbelievable 0% balance transfer offer from Discover Card; the offer: a 0% interest rate on balance transfers until the transferred balance is paid off (a.k.a. "forever.") In other words, if you accept the deal, you won't have to pay any interest on the balances you transfer, ever. Sounds too good to be true? Well, like all other 0% balance transfer offers, the fine print reveals some interesting details; catches that, as you might have guessed, give the credit card company the opportunity to make some money off you. The Discover Card deal described above, for example, requires that you spend at least $50 every month on purchases or cash advances in order to avoid being charged any interest on the balance(s) you transfer.

Scott Bilker crunches the numbers, and makes some interesting findings.

Conclusion: It's a pretty good deal, but Discover Card actually has some other truly excellent 0% balance transfer deals available, including deals that offer a standard annual percentage rate (standard APR) for purchases that's below 10% once the balance transfer period ends. Click here to check out the best Discover Card 0% balance transfer offers.

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Australia's Westpac Bows Out of The Credit Card Balance Transfer Wars

Australian credit card companies competing with Westpac's credit card products are offering some excellent credit card deals e.g. cards with a 0% introductory annual percentage rate (Intro APR) for six (6) months with no annual fee and a "go to*" interest rate that's less than 10%. Westpac is staying out of this "irrational pricing war" because "Balance transfer chasers, every six months, will just [transfer] their balance [to a new card]...As a bank that isn't exactly the way to make money." Despite all the great 0% balance transfer deals available to Australian credit consumers, Westpac is now offering a new low rate card that has a 10.75% APR and a fifty dollar annual fee.

Click here to read the full story


*The "go to" interest rate is the interest rate that a credit card company will charge once the 0% Intro APR period ends.

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UK Credit Card Companies--Fed Up with 0% Balance Transfer "Rate Tarts"--Now All Charging 2%+ Fee for Credit Card Balance Transfers

Here in the America, credit card companies are still offering some truly fantastic deals in order to get your credit card business, the best deals being those that combine an interest-free period on balances transferred with an interest-free period on new purchases made (also known as "free-free" deals--sweet!) But in the UK, credit card companies have had enough with all the profits they've been sacrificing by offering generous interest-free periods with their credit card balance transfers deals. Halifax (owned by HBOS), a major player in Britain's credit card market, has now joined competitors Barclaycard, Virgin, MBNA, Abbey, Alliance & Leicester and Mint in charging a 2% fee on credit card balances transferred. English "rate tarts"--people who bounce from one 0% balance transfer deal to the next in order to evade interest charges--are surely not happy about this news, as this could signal the end of an unprecedented era of savings for credit card consumers.

I'm sure that American rate tarts who read about this will be quite concerned as well, as this new trend in England could be a harbinger of things to come to the American credit card market. Time will tell. Click here to read the full story.

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