Will Balance Transfers Be a Thing of the Past?

With many people becoming ‘credit card rate tarts’, people who switch from one credit card to another regularly to avoid paying introductory fees and interest, companies are ditching their offers of 0% balance transfers to overcome major levels of profit loss. How long can credit card companies sustain this level of profit loss and what are the companies trying to do to regain some of the monies lost?

The Halifax has just introduced a 2% fee for balance transfers on one of their cards to coincide with the changes in the market; they are not the only ones, with other companies such as Barclaycard, MBNA, Alliance & Leicester, Virgin, Abbey and Mint already switching to charging a fee for balance transfers. Does this spell the end of 0% balance transfers?

Consumers are becoming wise to the credit card industry and how it works and are now more likely to change credit card companies to benefit them. This is costing the industry over 1 billion pounds a year. With so many introductory offers available it is no wonder that people want to take advantage of what is being offered and with companies vying for competition and offering the consumer even better deals the credit card companies have themselves to blame for their profit losses. Credit card companies are now trying to redeem themselves and claw back any profit lost at the expense of the consumer.

Recently credit card issuers were hitting back with excessive charges on late payments and charges for those who exceeded their credit limit. Consumers are also penalized for a late payment by credit card companies taking away their 0% interest offer and charging interest on the full amount of their balance. Most companies incur a charge of #20 for late payment; companies such as Tesco, First Bank and Nationwide are more lenient with a late payment fee of only #15.

Another way in which companies are trying to recoup their losses is by scrapping cash back offers. Alliance & Leicester got rid of their cashback offer to try and cut losses. You will still be able to get cash back credit cards but the other benefits on the card will probably be less than previously offered.

How long will it be before 0% balance transfers become history? With the decline of the offer already firmly in place only time will tell if this will happen or when this will happen

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