All Press Releases for February 19, 2010

Economic Recovery Signalled By Interest-Free Balance Transfer Credit Card Deals

Not even a year ago, financial institutions dumped credit and struggled to save every penny and pound possible. Is the reappearance of interest-free balance transfers an indication of recovery?

    MANCHESTER, ENGLAND, February 19, 2010 /24-7PressRelease/ -- The economy seems to be slowly finding its way out of the financial black hole and getting back on its feet. The re-emergence of interest-free balance transfer credit card deals definitely seems to indicate the country is well on its way back to financial health. And, while these deals are a great option for consumers and credit companies, is this as good as it outwardly appears?

Interest-free balance transfer offers give financial institutions and cardholders the opportunity to shift credit and debit into a more manageable position. However, at the beginning of the recession, personal debt grew to large proportions far outside historical values, and this drove the demand for better transfer deals. In a standard supply and demand situation, this would have improved the market for consumers, but this wasn't necessarily the case.

Financial institutions began to offer more interest-free balance credit cards, but they also changed the fine print. In the end, some cards that might have seemed like a better deal on the outside weren't so great. Some credit cards offset the income loss with high transfer fees, so by the time the transfer was made and the balance was cleared off, the institution would make more than their money back.

Other financial institutions shortened the interest free period to nine months or less, and at the end of this period, full interest would be added to the balance. In both cases, the only consumers who noticed a significant benefit were those who could repay the balance quickly. These weren't the only methods credit card lenders used to control the amount of debt they were assuming.

In addition to tight limits and caps placed on the cards and the interest-free offers, they also made it far more difficult for those who needed the balance transfer to get one. Customer's credit scores and financial histories needed to be near perfect. Then, there was the fine print in the original lender's contract, which often led to additional fees and interest.

"With the recession easing, smart consumers will be able to secure a great deal if they shop around. While some credit cards offer six months of mediocre interest rates and a transfer fee before moving balances to a high interest rate, for example, MBNA offers interest-free rates on balance transfers followed by a low interest rate that is often lower than what many consider a promotional rate," says Sandra Waldorf, of ThinkingMoney.

Great deals for consumers such as interest-free balance transfers provided by are out there. For consumers needing the financial break, it's simply a matter of finding the right lender. After that, they can forget about their debt and shift their focus back to achieving their goals, something the recession made difficult for far too many families.

- During the recession, lenders offered balance transfers, but the consumer needed to watch for high fees, capped balances, promotional interest rates that were only valid for short periods, and the need for near perfect credit to qualify.
- Credit card lenders are not only starting to move their credit, but they are also offering up deals that make it affordable and smart for consumers to make the switch.
- Deals like the one offered by MBNA, mean consumers can forgo the interest on their balance transfers and pay off the balance sooner.

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