Q: For 2016, is it still possible to get a credit card balance transfer for life?
A: Last decade, many major credit card companies would run balance transfer offers that gave zero percent for the lifetime of the balance. These promotions weren’t extremely common but they could be found with a little research.
Then of course the financial crash happened near the end of the decade, followed by the long recession. During that time the 0% for life offers disappeared. Despite the recovery and the fact that it’s now 2014, these lifetime 0% offers still haven’t came back.Will they ever return? A lot of times I get asked if the 0% lifetime credit cards will ever come back and I believe the answer is a big fat no. Here’s why…
For starters, it was all smoke and mirrors!
Before the Credit Card Act of 2009 went into effect, credit card issuers could and did raise interest rates on existing balances at will. The fine print in card agreements stated (in typical legal jargon) that banks could raise rates at any time for any reason. Not exactly consumer-friendly terms. So when you qualified for a “balance transfer for life” deal, in reality it only meant that you could enjoy those benefits until the bank decided to change them, at their discretion.
Creditors would use excuses like late payments or changes to your credit report as justification for raising your rate. When that didn’t work, some would raise the minimum payment amount up to 5% of the balance per month for accounts that weren’t paying down fast enough.
Now that the credit card reform is in effect, lenders no longer have the ability to simply raise interest rates in order to increase their profits that quarter (or pad a marketing executive’s year end bonus). They actually have to give the consumer 45 days advance notice of a rate hike, and if the consumer doesn’t agree then they get to pay off their existing balances under the old terms. Score one for the little guy. For that reason it’s unlikely we will see low interest fixed APR lifetime balance transfer offers again in our lifetme… because then the banks would actually have to follow through and honor them! Perish the thought.
The reform leveled the playing field
Before the reform, cardholders with bad credit and high interest rates were basically subsidizing the credit card deals that people with great credit had access too, such as zero percent offers.
Those transfer for life cards were often big money losers for the banks (especially when used by rate surfers) but the 20% to 30% APR and late fees paid by other cardholders would make up for it.
But now that the playing field has been leveled, those with both good and bad credit have to be treated equally in many aspects. Therefore those offers just don’t make financial sense for the creditors to do anymore.
The economy is not what it used to be
The economic crisis at the end of last decade was obviously a big wakeup call for everyone, especially the banking industry.
The golden era of job security for us appear to be over in today’s global economy. At the peak of the economic crisis, the credit card companies experienced this first hand when they saw a record number of defaults by accountholders.
This caused the creditors to [finally] come to the realization that they can’t just give out credit like candy on Halloween. It’s now quite evident even their most creditworthy customers might default in the future in the event of a job loss or foreclosure. This is another reason a lifetime balance transfer credit card is too risky to offer… even if the customer has top-notch credit and a good job right now, there’s no guarantee of that continuing forever.
How a lifetime balance transfer might still be possible
Even though a 0% for life card isn’t an option, there might still be a way you can avoid paying interest for the life of your balance. Here’s how…
Step One: Get the longest offer available
Find the longest B.T. offer you can (hint: check this ranking of the top rated balance transfer cards). Ideally if there are any offers with no balance transfer fees, that’s even better.
Step Two: Repeat The Process
If you can’t pay down the balance entirely before the 0% promotion is up, then you can transfer it again to a similar offer. If each offer is 12 to 24 months in length, there really shouldn’t be any reason why it would take you more than two offers to pay off the balance entirely.
Banking is all about fees, fees, and more fees nowadays. That means that the no fee transfer promotions are hard to come by (sometimes there are none offered by any card issuer). But once in a while one is available – if you happen to snag an offer that means you will be able to pay down your debt for free.
Conclusion: It still might be possible to get a 0% balance transfer for life of balance, that is, if you’re willing to be a rate surfer jumping from one card to another!