Do credit card companies like us to do balance transfers?

[ziggy29]

As far as the very low rate (or 0%) offers? They wouldn't offer it if they didn't want customers to do it.  That said, many of them charge a fee on the order of 3%, and those who charge NO fee are banking (no pun intended) on people still carrying a balance when the promotional term expires, and charge 20% (or whatever) on the remaining balance.  If you are not charged an upfront fee AND you pay it all off before the promotional rate expires, you win... but overall, they are expecting enough customers to not pay it all off that overall, it's a net win for them.  

[FlaDude]

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@ziggy29 wrote:

That said, many of them charge a fee on the order of 3% 

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A few still charge a 3% BT fee, 4% and 5% seem more common to me now.

[masscredit]

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@FlaDude wrote:

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@ziggy29 wrote:

That said, many of them charge a fee on the order of 3% 

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A few still charge a 3% BT fee, 4% and 5% seem more common to me now.

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I haven't done a BT in years so not up on the current rates. I noticed my Cap 1 cards offer no BT fee but it's at the current rate. I believe the BT fee was 3% the last time I did one.

[MitchDeerfield]

Since money market funds pay 5.30 percent interest these days, it's amazing that I am always receiving BT offers for 15, 18, and even 21 months at zero interest and a one time 3 percent fee.

That turns out to be between 2.25 and 2.75 annual interest when the banks can get 5.30 risk free from U.S. Treasury Bills!   I don't get it myself but I do frequently take advantage of the deals.

[Rogue46]

I think the endgame for these banks is to get you spending on their cards, If a 0% balance transfer can get you in that's what they will go with. Collecting transfer fees and interest is just the icing on the cake.

[Anonymous]

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@MitchDeerfield wrote:

That turns out to be between 2.25 and 2.75 annual interest when the banks can get 5.30 risk free from U.S. Treasury Bills!   I don't get it myself but I do frequently take advantage of the deals.

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As @Rogue46 says, it may be worth it (from the bank viewpoint) to get you as a customer spending on their card.  So the opportunity cost, between the Treasury rate and the rate they get,  is just a loss leader, getting you into the store...