The End of 0% Balance Transfers?

Credit issuers have taken a beating within the last few months, especially when the government enforced new guidelines to credit companies forcing them to be more helpful to its struggling customers. Now the credit card issuers have to wait up to two months before they can demand payments from customers who are in arrears, and aren't allowed to hike up interest rates or minimum payments without giving notice. They will have to make up the extra cash somehow- so it appears to be the end of 0% balance transfers.

To pull customers in, many card issuers will offer a period where the customer can use their card interest free. This is appealing to many customers, as they will save money as opposed to using a card which charges interest. The downside is, these deals are costing credit card companies up to £600 million per year, so many feel it is time to withdraw these offers from the market. Many customers will take advantage of interest free offers, and then switch card providers when the offer runs out. With the recession looming, credit card companies can not accommodate these anymore. The first credit card giant to withdraw this offer was Capital One, one of the most popular choices for credit card applications. Even though Capital One may become less attractive without this type of offer, the revenue the company will save will help to stabilise its finances.

Credit card companies are planning to tighten their belts in another way too; there will now be fees for anyone who wishes to transfer their balance to another company. These fees will be charged to prevent people from taking advantage of interest free deals and then leaving the card provider before they have made any money from the customer. Card companies will now be more vigilant in their application processes when concerning people who have previously switched credit card companies to take advantage of these offers. Some people are not aware that switching companies will be recorded on your credit record, and now this may be seen as an unattractive way of borrowing to many credit card providers.

Even though some credit card companies will be eradicating interest free offers, there are still some good interest free credit cards on the market. Before committing to a card company, research the market to make sure you get the best deal possible.