The following is the text of an e-mail that I recently received from a reader:
I like playing the 0% balance transfer game and investing the proceeds in an interest-bearing account. However, I’m finding it harder and harder to find any cards with no balance transfer fees or at least caps on their fees… I just haven’t been able to find any new offers with caps on the fees. Is this game essentially dead?
This is a great question, and the sad truth is that it’s getting harder and hard to find no-fee 0% balance transfer offers. In fact, as far as I’m aware, there aren’t any fee-free, 12+ month 0% balance transfer offers out there. Sure, there are lots of cards with no annual fee, and there are even some with no balance transfer fee, but those offers only run 6-9 months.
As far as the issue of capping the balance transfer fee goes, the news is somewhat better. While the industry standard seems to be a 3% fee, and many issuers have removed their caps, others have continued to cap this fee. Probably the best card issuer in this regard is Discover, who offers 0% on balance transfers for twelve months, and their 3% balance transfer fee is capped at $75.
Is the 0% balance transfer game dead? Hardly. While the increase in fees combined with the decreased yields being paid by the best online banks makes it more difficult to turn a profit, it’s certainly still possible to make some easy money.
Here’s the deal… Apply for a 0% credit card offer and get your hands on the cash from the balance transfer. Next, plug it into a high-yield, online savings account. The primary limitation here is that, if you card has a transfer fee, you have to find an account that yields more than the fee or you won’t be able to turn a buck. Just be sure to stay current on your minimum payments and pay off the balance before the 0% promo period ends.