Transfer Credit Balance To One Card

New rules promote smarter use of credit cards

WASHINGTON (AP) — Get ready for the sticker shock from your credit cards to hit you even sooner.

The government's new watchdog wants consumers to have a complete picture of a card's costs before they apply — including its exact interest rate and credit line. Currently those terms aren't determined until after an application is processed.

Having the information upfront will help borrowers make smarter choices, according to David Silberman, the assistant director for card markets for the new Consumer Financial Protection Bureau.

"When the costs and risks of a credit card are clear, consumers generally will make wise decisions about borrowing," said Silberman. He said letting people compare rates and credit limits before applying for a card would be a significant step toward that goal.

The CFPB can't prevent consumers from charging too much and it can't dictate the interest rates banks charge. But it's planning several changes aimed at helping consumers avoid fees and debt overload, simply by making the right information available, Silberman said.

In addition to the early disclosure of specific interest rates and credit lines, the agency is considering tweaking the summary of rates and fees that appears on marketing materials.

For example, balance transfer offers usually carry a one-time fee of about 4 percent. Yet the first line of the summary of terms lists the interest rate for balance transfers, which often is a promotional rate of 0 percent. The fee information appears several lines down.

The CFPB also is developing easier-to-understand legal disclosures for new card customers.

The changes would build on sweeping new regulations that went into effect last year.

Under the new rules, monthly statements must now state how long it would take to pay off debt if only minimum payments were made, and how much interest a borrower would pay over that period. Statements show how much borrowers need to pay to be debt-free within three years.

To understand the effect of the additional disclosures, officials are studying data from credit bureaus, academics and regulators that were produced for a conference marking the one-year anniversary of the new requirements.

So far, the additional information appears to be helping consumers.

A phone survey of 800 cardholders by market research firm Synovate found that about one-third of the respondents who noticed the changes to their bills, used their cards less or made larger payments. About the same number said the new rules make it easier to pay on time, according to the study, which was commissioned by the CFPB.

Making The Most Of Credit Card Balance Transfer Facilities ...

Smart credit card consumers can pit one card against the other and pay no interest ever on a credit card balance. It takes a little organizational skill, and a keen attention to detail, but it can be done. First, to get a 0% transfer offer, you have to have decent credit. I know, it seems like the banks would make the offers to people who need it the most, namely, those in trouble. But banks aren't charity, they're in it to win it just like the rest of us and they make money off fees. Why would they give up what has been a very lucrative income stream just to help out consumers?! If you have decent credit, and a good job history, you're going to get a ton of offers in the mail. Take the first 0% balance transfer deal that comes along (you could go for 1% or 2%, but holding out for zero means you're just paying for what you spend, and not anymore!) Apply for the 0% transfer, and pay careful attention to when you receive the card and when they transfer your balance. The key is the fine print, and if you're one day late, they tack on accrued interest charges. Some banks have a 25 day grace period, though now it seems like most are stuck at 20 days. The 0% offer is usually for six months, which means you're going to have to make 6 payments to bring the balance down.

Make your payments as soon as you receive your statement, better yet, set it up for automatic online payments and be sure you set aside the money in your bank account. Automatic payments will help you in the near future.

Keep up with the direct mail pieces you are getting for any other 0% transfer offers. During the fourth month, apply for another. You choose the fourth month if you're mailing in your application but if you can get instant approval online, you can wait until the fifth month. Do not wait until the last minute to apply for a balance transfer to a new card because if they miss by one day, you get socked with interest. Maybe not the whole six months accrued, but banks can be tricky when it comes to collecting fees, so err on the side of caution.

In the fifth month, move the balance to a new card, and repeat the process five months later. You will now have three credit cards, with credit limits as high as your transfer amount or even higher. Two of those cards will have no balance on them, and you will have been making payments on the third credit card every month, which will reduce the balance that you are not paying interest on.