Balance Transfer Credit Card Offers & The Card Act

With the CARD Act taking effect today, long term 0% balance transfer credit card offers may be one step closer to extinction.  Since the CARD Act began to gain traction in early 2009, credit card companies have been raising rates on their current customers while lowering the quality of available offers to new customers.  The primary changes, where balance transfers are concerned, involve the shortening of 0% interest rate periods and the increase of balance transfer fees.
Before the CARD Act gained traction in Congress, typical balance transfer offers lasted for 12 months and charged a standard 3% fee, with a maximum amount of $75 per transaction.  Today, many balance transfer offers only last 6 months, and balance transfer fees range from 3 to 5% with no dollar limits.
Ultimately, the changes to balance transfer credit card offers have diminished the power of these money saving transactions.  In 2008, balance transfers were truly a free-lunch.  Thanks to the CARD Act, the bill for that lunch has come due.  Consumers can longer reap the large benefits they once did.  However, even with higher fees, balance transfers are still an effective tool in reducing interest expenses and, if used properly, in reducing the time it takes to get out of credit card debt.
In the past, just about everyone could benefit from balance transfers.  Today, however, 0% balance transfers provide substantial benefits to most people with interest rates of 14% or more.  Those with lower rates are both lucky and, unless they intend to fully repay their debt before the 0% period expires, likely better off keeping the good rate they currently have.
Consumers with interest rates of 15%, 20% or 25% will likely save around $100, $150, or $200 for every $1000 transferred to a new card with a 0% rate for 1 year and a 5% balance transfer fee.  This is no small amount and a good reason to consider a balance transfer if your current rate has recently been raised.  In a few months, getting a 0% APR for a year may not be possible, so acting now is important.  Balance transfer offers have become much less generous over the past year and in a few months, there may be few good deals around.