Balance Transfer Risks - Be Careful!
A few weeks ago Bankrate wrote a post on balance transfers and how to transfer to a zero percent interest card, take the credit limit out via convenience checks, invest that money in a high-yield savings account or CD, pay off the card with that money when the zero-percent intro rate expires and keep the profit from the savings account or CD.
After doing some research a few companies seem to have removed the cap from the balance transfer fee. Most companies charge a fee of 3 percent of the amount transferred, capped at $50 or $75. Here are some of my results:
Advanta: 3%, $5 min, $50 cap
American Express Blue: no balance transfer fee
Bank of America World Points Mastercard: 3%, $10 min, no cap listed
Capital One: no balance transfer fee
Chase Bank Freedom: 3%, $5 min., $75 cap
Citi: 3%, $5 min., no cap listed
Discover: 3%, $5 min., $50 cap
HSBC: 3%, $15 min., $99 cap
Pulaski Bank: no balance transfer fee
Simmons Bank: no balance transfer fee
I also looked at a couple of other BofA cards and found that the Bank of America Platinum Plus Visa says there is no transfer fee, but in the fine print it says this:
“We include Transaction Fees when computing finance charges. Incurring Fees results in an APR exceeding 0% for the billing statement on which Fees appear. The Daily Periodic Rate (DPR) will remain 0% as disclosed”.
Since AmEx doesn’t have a fee on its cards, I looked at the Bank of America Rewards American Express. It says: 3%, $10 min., no cap listed, and the same footnote as above.
So my advice for anyone thinking of doing a balance transfer is to choose your card very carefully and be sure you read the finest of the fine print.