Credit cards that offer 0% on balance transfers used to be fairly commonplace in the credit card market. Cardholders were often able to transfer balance from one card to another over and over again and avoid interest payments for years at a time.
These offers have all but disappeared recently but recent credit card launches featuring balance transfer deals indicate they are set for a comeback.
The main reason that interest free balance transfers began to disappear was the introduction of new legislation which placed heavy restrictions on some of the common practices carried out by credit card issuers. The CARD Act 2009 made a large number of changes to credit card lending and marketing.
This cut many card issuers’ profits meaning they discontinued many offers and marketing ploys which, while common, were not profitable to the lender. Balance transfer offers were one of those marketing practices that began to disappear.
The early indications for 2011are that credit cards are being used more, having been in a slump due to recession. In the first two months of the year, credit card issuers were increasingly seen to offer 0% interest on balance transfers in order to entice new customers to open accounts and even to tempt back previous customers who had turned away from credit card borrowing when money became tight in a bid to stay debt free.
One example of the reemergence of balance transfer offers can be seen in two new credit cards launched in January by Discover as part of their Discover More range. The new card accounts offer different balance transfer offers to new customers.
The first of these cards boasts no balance transfer fee and 0% interest on both balance transfers and new purchases for an entire year. The other does carry a 5% balance transfer fee, but offers a longer 0% interest period of twenty four months on balance transfers and purchases, making it the longest 0% transfer offer currently available.
A spokesman for Discovery, Matthew Towson, states that Discover “has been very pleased with the response we’ve received on our no balance transfer fee offer. We’ll continue to provide competitive balance transfer offers throughout the year.”
As other lenders see the success of these offers from Discover and other credit card issuers, they will follow suit and launch their own offers allowing balance transfer offers to make a comeback.
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