Amidst all the additions of new fees to their customers, the banks are going even one step further.  The four largest banks in the US are hoping their customers with the best credit ratings will actually incur more debt.  They are offering balance transfers to these premium customers in hopes that they will transfer the balances of their accounts to new accounts with interest rates as low as 0%.

Bank of America

The largest of all the banks, Bank of America, is now offering those customers with the best credit ratings a zero percent rate if they will transfer existing accounts to their bank.  These balance-transfer checks can be used like loans, all instead of paying off their current debts with other banks.

These offers comes as banks are raising and adding fees to most checking accounts in the hopes of making up for other lost revenues.  These deals can be very good for those customers with the very best credit, if they follow the new rules precisely.  In contrast, the new rates for an unsecured personal loan can be as high as 14%, so you can see how attractive this offer may be to some.  And Bank of America is not the only bank doing this.  Wells Fargo, JP Morgan Chase, and Citigroup are also making similar offers in the hopes of moving so called “Platinum” customers to their banks.

JP Morgan

For example, customers at JP Morgan have been receiving offers of these balance-transfer checks for as much as $5000 at zero percent interest.  Such offers are good for as many as 15 billing cycles.  Citigroup is making the same offer for as low as 0.99%.  Such customers can deposit these checks straight into their accounts and use them the same as cash, all virtually interest free.  There is a one-time fee incurred, but the amount is nominal, like only $5 or 3%.

Customers who may consider doing this should be aware that they are not advised to do so unless they are confident they will be able to meet all the requirements, such as meeting all the monthly minimums.  They should also be sure they will be able to pay off the balance in full by the end of the term, or face steep interest charges if they cannot.  This is where they get stung, when they cannot pay off the balance in full at the end of the promotion.

Bank of America, for instance, jumps its interest rate all the way up to 22.99% for those with a balance still remaining after the terms of the promotion.  Citigroup jumps its rates to 14.99%.  “It looks like they’re giving away the farm,” said Ben Woolsey, director of marketing and consumer research for CreditCards.com. “On the small percentage of people who don’t pay it off on time, they make a killing.”

Not First Time

This is not the first time Credit Card companies have offered 0% interest rates for transfers.  Back in the 1990’s, this was also a very popular program.  Many people, however, were caught off guard when the terms of the offer expired and the interest on the balance left jumped to a whopping 20% and even higher.

These types of offers however can be very good for investors.  If you are one of the few who can get up to $20,000 transferred for free, then there is money to be made.  If you were to invest that money in say a US Government, bond mutual fund over the last 3 months, you could have made over $4000.  Some fees may apply, but at zero percent interest, it’s hard to earn less in any conservative investment.