Lending Club Blog

Negatives of Credit Card Balance Transfers Getting Worse

A while back I described The Balance Transfer Game – transferring a credit card balance from one card to another with a low teaser rate. The game had many downsides at the time, and has since gotten even worse.

According to Market Watch, recent changes will cause credit card balance transfer deals to cost you more in at least the following ways:

Transfer Fee Caps Have Been Eliminated

Fees have traditionally been a set percentage up to a capped maximum. With the cap removed, the more you transfer, the more you’ll pay.

Teaser Rates Are Rising

0% on balance transfers was the norm for a long time. Now, many offers are at 2.99% or higher. Paying no interest while the teaser rate was in effect was enticing, but non-zero rates are much less so.

Terms of Teaser Rates Are Shortening

Along with 0% offers, teaser rates traditionally lasted for at least a year. Now some are in effect for as little as 3 months. A shorter term makes playing the game less desirable and requires participants to play much more often if they hope to keep up.

Transfer Maximums Are Decreasing

The total amount that is eligible for the teaser rate is also coming down. This too effectively makes consumers have to play the game more often, since they might need to spread their current balance across multiple new cards to qualify for the teaser rate for the full balance.

The combination of these four changes means that if you choose to play the balance transfer game, you’ll probably be able to transfer less, you’ll see higher rates and pay a larger fee on what you do transfer, and you’ll have less time before the teaser rate gets reset to your much higher normal interest rate.

If the balance transfer game was a risky one to play before, it has gotten even worse as a result of these latest changes. There are still legitimate ways to play the game, but those fitting the criteria for success are dwindling in numbers. For the rest of us, using balance transfers is a practice best avoided, particularly when lower risk alternatives for consolidating credit card debt (such as the fixed-rate, 3-year P2P loans from Lending Club) are readily accessible.

Have you played the balance transfer game lately? Was it worth it for you?

Wednesday, January 28th, 2009 at 6:12 am

Comments (0)


Welcome Home

Lending Club named #5 on Forbes’ Most Promising Companies List

Get ready for tax season with Lending Club’s Tax Form Guide

New Adjusted Return Metric

See more
Lending Club Awards
  • Archives z

Recent Posts

More Data Coming for Investors

We’re always seeking feedback and looking to make the… Read More »
November 10, 2015

Lending Club Surpasses $13 Billion

Check out our updated infographic to see what a… Read More »
October 29, 2015

Lending Club Launches Multi-Draw Line of Credit for Small Businesses

We’re excited to announce the… Read More »
October 16, 2015

Bloomberg Markets Names Renaud Laplanche on its 2015 “Most Influential” List

Read More »
October 6, 2015

Congratulations, Carrie! Named 2015 Financial Woman of the Year by The Financial Women of San Francisco

Read More »
October 5, 2015

Congratulations to Carrie Dolan – Named one of American Banker’s 2015 Most Powerful Women in Finance

Read More »
September 22, 2015

Welcome Nebraska, Kansas, and Indiana Investors!

We recently welcomed residents of Nebraska, Kansas, and Indiana… Read More »
September 21, 2015

Lending Club Job Spotlight: Technology & Member Support

Our Technology team develops and… Read More »
September 14, 2015

What $11 Billion Can Do

In celebration of surpassing $11 billion in loans and… Read More »
September 3, 2015

Welcome Arkansas, Iowa, and Oklahoma Investors!

We recently welcomed residents of Arkansas, Iowa, and Oklahoma… Read More »
July 14, 2015


We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w