Has the credit crunch made it impossible to do credit card balance transfers?

October 3, 2008 10:12 AM

I want to transfer a credit card balance to another card that would offer me a 0% interest rate for a few months. But I'm worried that the credit crunch has made it difficult or impossible to do such balance transfers. Is this the case?

A little bit about me:

Citizen and resident of the USA. I have one card with a few thousand on it. I'm pretty close to maxed out; I only have a few hundred left before I reach my limit. My credit is OK but probably not excellent -- it's been a while since I've checked. I worked very steadily in the past but the situation is shaky right now. Nowadays, I get work in bits and pieces and supplement that with unemployment insurance. I have always paid my credit card bill on time and I have never exceeded the limit. I'm holding my own but not prospering.

So . . . has the recent credit crunch made it impossible for people in my financial position to do such balance transfers? What have your experiences been over the last few months? What kinds of deals are the banks offering? Are there any cards that haven't tightened their standards in the last few weeks? What would be my best options?

Many thanks in advance.

posted by jason's_planet to work & money (9 comments total)

I've got moderately crappy credit, but BoA still gave me a card with 0% on balance transfers for 1 year. The limit was $2000, so I put my last $1000 of credit card debt on it, and retired it to a drawer until I am debt free. I did have a reasonably well-paying job, though.
posted by bashos_frog at 10:24 AM on October 3, 2008

Make sure you check the terms of the balance transfer. There is usually a fee (something like 5% of the transfer amount, not to exceed x dollars). So, if this fee is more than the savings you'd get from the lower interest rate, it might not be a good idea to transfer, especially if the 0% interest is only for a few months. You'll have to crunch the numbers to make sure.

Although your question seems to be asking about obtaining more credit and then transferring your balance. I'm not sure, but I would think that if your only credit card is close to maxed out, your FICO score must be pretty low. As such, any new credit you get will have a high interest rate. They might offer introductory rates, or balance transfer deals on opening a new credit card, but again, beware of the transfer fee. Maybe get a free credit report?

On preview, bashos_frog can get one, so maybe you can too. But, remember to read the fine print!
posted by pipco at 10:29 AM on October 3, 2008

I just got 0% for one year offer from Citibank (to open a new account) and a 0.99% forever offer (on a card I already have) from US Bank. Like, just yesterday got both of these offers in the mail. So they're still out there. I have also recently accepted two "free" airline tickets to get an American Express gold card. ("Free" means I have to pay a fee of up to $75 to convert the points to miles on my preferred airline. Still cheap.)

Do watch out for the 3-5% balance transfer fee. Some of them cap it at $75 or $100, which is a deal if you are transferring a balance of, say, $20,000.
posted by kindall at 10:35 AM on October 3, 2008

Some of them cap it at $75 or $100

...but a LOT don't - and it's a relatively recent change. Read the fine print!
posted by tristeza at 10:42 AM on October 3, 2008

I just did exactly this, transferring a balance to a citibank card with 0% APR. That was at the beginning of September. So, yeah, it still seems to be doable.
posted by Greg Nog at 11:03 AM on October 3, 2008

I've recently taken advantage of Discover's 0% until August (3% fee, uncapped) and a Citibank 3% until April (3% fee capped at $99).

My REI card from US Bank has a 2.99% "for life" with 3% uncapped fee that is tempting.

Note than IME with Citibank it's possible to transfer to my daily use card to get a credit balance, request a refund of the credit balance, and just get the money that way.
posted by troy at 1:19 PM on October 3, 2008

Personal credit like this isn't as hard hit as the media might let you think. I get these offers almost daily in the mail, though I'm not really in your same position. The thing that concerns me about your situation is that you seem to be looking for further credit, when you're not currently paying down your bill, nor living within your means. Getting a better rate is always good, no doubt, but transferring credit so you can accrue more debt is bad. I would suggest taking a holistic approach to this and make it a part of a larger plan to eliminate your debt. If you transfer your debt to a lower interest card, I'd eliminate the original card, and figure out how to live within your means. Transferring your debt is a good trick as a part of that approach, but without taking a serious approach towards cutting out the debt, you can end up in a deeper hole.

Certainly doable, but check the fine print as was mentioned, and see what the transfer fees are. Also, a lot of cards will revert to a much higher rate if you make even just one payment late.
posted by Eekacat at 3:57 PM on October 3, 2008

Banks are being a little tighter with the amount of the credit line they'll give you, and some have tightened approval standards somewhat, although not dramatically, but if they're offering you a BT and you have a card, you can definitely use it.

If you only have one card, little history, and near 100% use of your credit line, you might find it difficult to get approved if you don't already have a card in hand you want to balance transfer to.

Don't follow Eekacat's advice about closing your original card, though. The age of the trade line and the unused available credit will help your score and offset the (possibly) high balance on the new card.

Closing lines is silly unless you either have a mortgage broker breathing down your neck to close some so you can get a better rate on a home loan, you are paying an annual fee on the account, or you have no self control and will otherwise run up a balance.

If you give creditboards.com a read, you can get an idea of how the banks are behaving relative to FICO these days. My score isn't great, as I have a 30 day late from several years ago, and up until last year, the banks were throwing credit at me. Not so much the last few months.
posted by wierdo at 8:21 PM on October 3, 2008

The thing that concerns me about your situation is that you seem to be looking for further credit, when you're not currently paying down your bill, nor living within your means.

Well, by way of clarification . . . the point of doing the balance transfer is to allow me to pay off more of the balance without my payment being eaten up by interest charges. Not to rack up a whole bunch of extra charges.

Anyway, thanks for all of your responses and your advice. I appreciate it!
posted by jason's_planet at 1:51 PM on October 4, 2008