Credit Card Balance Transfers Popular But Foggy

New research reveals about 75% of credit cardholders have a fundamental misunderstanding about how introductory 0% balance transfer credit cards work, despite the fact that half of all surveyed cardholders have had a balance transfer card in the past. Additionally, only 54% of balance transfer cardholders paid off the entire transferred balance during the introductory reduced-interest rate period.

CompareCards reviewed the terms and conditions of 167 credit cards that allow balance transfers as part of the 2019 Balance Transfer Credit Card Report. This research showed 0% introductory offers are still easy to find, and while most of those cards charge a one-time fee on that transferred balance, you can find cards that don’t impose a fee if you shop around.

Key Survey Findings:

  • 76% of cardholders are misinformed about a key balance transfer benefit. More than 3 in 4 respondents inaccurately believe that if they don’t pay off the entire transferred balance during the reduced-interest introductory period, they’ll be billed for retroactively for all of the interest they would have otherwise accrued during that time frame.
  • Fewer people said they paid their most recent transferred balance in full during the reduced-rate introductory period this year than last year. Of those cardholders who transferred a balance, 54% said they paid off the entire transferred balance during the introductory reduced-interest rate period. That’s down from 59% last year.
  • Nearly 20% of credit cardholders plan to get a new credit card in order to transfer to another card’s balance next year. Another 32% are considering doing so. Men are twice as likely than women to plan on opening a balance transfer card in 2020. Nearly one-third of millennials plan on opening a balance transfer card in 2020.
  • Half of all credit cardholders have opened a new credit card specifically to transfer another card’s balance. That number includes almost 18% who have done so more than once.

For the annual study, 167 cards were reviewed for the terms and conditions of balance transfers.

The state of balance transfer credit cards today:

  • Introductory balance transfer APRs: 84 of the 167 cards surveyed came with an introductory APR offer for balance transfers, and 77 of those 84 offers were at 0%.
  • Duration of introductory balance transfer APRs: The average length of the introductory period was 14 months, though the durations ranged from six to 36 months.
  • Ongoing balance transfer APRs: For cards that come with an introductory offer, the average post-introductory-period APR was 19.37%, about a point lower than the overall average for all credit cards. For those cards without an introductory offer, the APR was higher, coming in at 20.57%.
  • Annual fees on balance transfer cards: 128 of the cards reviewed came with no annual fee, at least for some period, though 11 of the cards waived it only for the first year. Among cards that charged an annual fee, the median fee was $95.
  • No-fee balance transfers: 18 reviewed cards never charge a balance transfer fee, while four others came with an introductory period in which the fee was waived.
  • Balance transfer fees: The most common fee was 3% of the transferred balance, with a minimum of either $5 or $10.
  • “Use it or lose it” deadlines: 54 out of 84 cards with an introductory balance transfer APR required cardholders to transfer the balance within a certain window in order to take advantage of the introductory offer. The most common timeframe was 60 days.

For the full survey findings and the full report, visit: https://www.comparecards.com/blog/majority-misunderstands-0-balance-transfers/