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Zero-Interest Balance Transfer Offers Remain Plentiful, Even as Fees Tick Higher
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As Americans wrestle with widespread inflation, rising interest rates and economic uncertainty, there are few better tools to fight debt than balance transfer credit cards with 0% intro APR offers.
The newest LendingTree report brings good news: These balance transfer cards, which can come with a 0% intro APR for up to 21 months, are more widely available than at the start of 2022. And their issuers are also increasingly likely to offer no interest on new purchases.
However, the news isn’t all great. We have seen fees rise slightly on some of these cards, with no guarantee that issuers won’t rein in these offers as the Federal Reserve continues to raise rates. But for now, Americans with good credit looking to refinance or consolidate high-interest credit card debt will likely have strong options.
- Balance transfer offers are more widely available than when the year began. Yes, credit card interest rates are rising, thanks mostly to the Federal Reserve, but 0% intro APR balance transfer offers remain plentiful. In fact, card giant American Express recently re-entered the balance transfer game after putting the brakes on offers in the darkest days of the COVID-19 pandemic.
- The longest-lasting zero-interest balance transfer offer is 21 months, though 12 months is most common. This is unchanged from the start of 2022. More than 80% of zero-interest balance transfer cards in January and September 2022 offered 12 or 15 months interest-free on transferred balances.
- Our data analysis shows a slight uptick in cards with higher balance transfer fees. A 3% balance transfer fee remains the most commonly found with 0% intro APR offers. However, 46% of zero-interest balance transfer card offers come with fees of 4% or 5% — up from 43% in January 2022.
- 0% intro APR purchase offers are more common on balance transfer cards than at the start of 2022. Balance transfer cards aren’t always solely about transferring balances. They can also offer 0% intro APRs on new purchases. Nearly 6 in 10 (59%) zero-interest balance transfer cards come with 0% intro APR offers on transfers and new purchases — up from 50% in January 2022.
Zero-interest balance transfer cards are widely available
A relatively small collection of megabanks dominates the credit card space, and that doesn’t change when you’re talking about 0% intro APR balance transfer offers. However, those giant banks aren’t the only ones in town, so LendingTree cast a wide net to get a full view of the balance transfer credit card landscape. We looked at the biggest banks, of course, but we also looked at other banks and credit unions.
The biggest change in recent months is the return of American Express to the balance transfer space. During the pandemic, AmEx eliminated balance transfer offers. However, that changed in recent months. At the time of this writing, the card giant lists five cards with 0% intro APR balance transfer offers on its website, offering either 15 or 12 months interest-free.
Most AmEx cards don’t feature 0% intro APR balance transfer offers — or even allow balance transfers — but this is a significant development that stands to make an already exceptionally competitive marketplace even more so. Consumers tend to benefit when that happens.
0% intro APR balance transfer offers typically last a year or more, going up to 21 months
The aforementioned American Express offers are in line with typical 0% intro APR balance transfer offers seen today.
Our review of 121 zero-interest balance transfer card offers shows:
- Most common duration of 0% intro APR balance transfer offers: 12 months
- Percentage of 0% intro APR balance transfer offers lasting either 12 or 15 months: 81%
- Longest zero-interest offer: 21 months
Those numbers are largely unchanged from the start of 2022. That’s generally good news for consumers who may find themselves back in credit card debt as inflation rises and interest rates jump.
However, it’s unclear whether these trends will last. As the Federal Reserve raises rates, borrowing doesn’t just become more expensive for consumers. It becomes more expensive for banks, too. As that happens, it becomes more challenging financially for banks to offer zero-interest deals. As a result, banks may shorten the length of the typical 0% intro APR offer, or offer fewer deals altogether.
We’re certainly not seeing either of those things today. However, there are other ways that issuers can tinker with balance transfer credit card offers to make them a little more profitable, including increasing the fees associated with them. That’s where we’ve seen some change in the past year, albeit small.
Higher balance transfer fees slightly more common
Most 0% intro APR balance transfer credit cards charge a one-time fee each time you transfer a balance. The most common fee is 3% of the transferred balance. Most issuers also set a minimum fee of $5, $10 or $15, meaning that if 3% of your transferred balance is less than the minimum, you’ll instead pay the minimum.
For years, 3% has been the industry standard for balance transfer fees. That certainly remains the case today, with 59% of zero-interest balance transfer cards charging that amount, largely unchanged from 60% in January 2022.
Our review of 121 zero-interest balance transfer card offers shows:
- Percentage with balance transfer fees of 4% or 5%: 46%, up from 43% in January 2022 (when we reviewed 111 cards with zero-interest offers)
- Percentage with balance transfer fees of 5%: 26%, up from 23% in January 2022
- Percentage with no balance transfer fees: 6%, down from 8% in January 2022. All these cards come from credit unions.
- Percentage offering reduced or eliminated balance transfer fees during an introductory period: 15%, down slightly from 16% in January 2022. The most common introductory fee offer was 3% for 60 to 120 days before rising to 5%.
These changes aren’t huge, and it’s unclear whether they’re a blip or the start of a longer-term trend, but they’re noteworthy.
If you’re transferring a $5,000 balance, a 3% one-time fee will cost you $150, while a 5% fee will cost you $250. That extra $100 may not rock your world, but it’s not nothing either. When you’re struggling to pay off your debt, every penny matters.
Again, these fee increases are one of the under-the-radar ways issuers can bump up profitability on balance transfer cards without shortening the duration of the 0% intro APR periods. It certainly bears watching as to whether more issuers opt to increase their fees in the coming months as the Fed continues to raise rates, starting with its next scheduled meeting on Sept. 20-21.
0% intro APR purchase offers becoming more common, too
For most people, the primary point of getting a 0% intro APR balance transfer credit card is to reduce their debt. The cards are hugely popular because they allow people to avoid paying interest on balances they’ve already run up, and the last thing most people want to do is use these cards to run up more purchases. In many ways, it would defeat the purpose of getting the card.
Still, zero-interest balance transfer credit cards have long come with 0% intro APR offers on new purchases as well, and that’s certainly the case today.
Of the 0% intro APR balance transfer credit cards we reviewed:
- 59% came with a 0% intro APR offer on new purchases. That’s up from 50% at the start of 2022.
- The longest 0% purchase intro APR period was 21 months. That’s the same maximum length we saw with balance transfer credit cards and is unchanged from January 2022.
- The most common 0% intro APR purchase period was 15 months. That’s longer than we saw with balance transfer offers, though it’s unchanged from the start of the year.
The rise in 0% intro APR purchase offer availability is good news for consumers if the cards are handled wisely. To be clear, folks using these cards primarily to pay down debt should continue and try to keep any new purchases to a minimum, even with the zero-interest deal. However, if they don’t currently have debt and are looking for a low-cost way to finance a major purchase or extend their budget for a few months, these 0% intro APR purchase offers are worth considering.
The bottom line: Now’s the time to take advantage of these debt-busting tools
A 0% intro APR balance transfer credit card is one of the best tools people can use to reduce high-interest debt, and the best news from this report is that they’re as widely available as they’ve been since the beginning of the pandemic. If you have good credit and are struggling with credit card debt, you’re doing yourself a disservice if you don’t at least consider getting one of these cards. It’s as simple as that.
Before you apply, there are some things you need to ask about the card, including:
- How long does the interest-free period last?
- How quickly must you do the transfer to take advantage of the 0% intro APR rate?
- What’s the maximum amount you’re able to transfer?
- What’s the interest rate on the remaining balance once the introductory period ends?
- How much is the balance transfer fee?
- Does the card have a 0% intro APR offer on new purchases? If so, how long does it last?
Know that the answers to these questions can vary significantly by issuer and card, so shopping around is vital. Failing to do so can end up costing you real money.
It’s also important to understand that there’s no guarantee these offers will last. We’re already seeing a few fee increases and could see more in the future. We could also see issuers begin to shorten the duration of the 0% introductory periods with these cards.
Ultimately, the main takeaway from this report is that now is the time to act if you’ve been considering getting a 0% intro APR balance transfer credit card. Used wisely, they can save you a significant amount of money, and the offers available today are as strong as we’ve seen in years. That means that folks struggling with card debt have many options available, which is great news, even if they may not be around forever.
LendingTree reviewed offers for 121 credit cards with 0% introductory APR periods on balance transfers. Cards from 36 issuers — including banks and credit unions — were included. We reviewed basic terms and conditions, including APRs and annual fees and evaluated the cards’ balance transfer programs. All offers were reviewed online on financial institutions’ public websites. Credit card offer data is accurate as of Sept. 9, 2022.