Changes coming to balance transfer offers
Citi is planning to shorten or altogether eliminate some balance transfer promotional periods.
Consumers who can pay off debt with a 0% or low-interest credit card balance transfer have a significant savings tool, and credit card giants like Citi know it full well. That’s why they’re planning to make changes as interest rates continue to rise.
Rising interest rates affect borrowers and lenders alike.
“We face continued headwinds from growth in transactor and promotional rate balances, which we are funding at a higher cost versus last year given the higher interest rate environment,” Citi chief financial officer John Gerspach said in the company’s latest earnings review.
The good news is that savvy consumers are taking advantage of low-interest balance transfer offers – “the growth in promotional rate balances reflects a strong response to our offers,” he added.
The bad news is that Citi is beginning to change things as interest rates – and therefore its costs to lend money – go up. The company will be taking actions like “shortening or eliminating the promotional period on certain offers”.
With interest rates so low for so long, many borrowers have become accustomed to attractive balance transfer offers, some of which offer fees of just 3% and an interest rate at 0% to 5% for 6 to 24 months. Shortening the promo period speeds up the deadline for borrowers to pay off the balance transfer, and if they miss that deadline, the rate on any remaining balance will inflate much higher, often somewhere between 10% and 24%.
See where you can still get a great 0% interest offer in our list of the top balance transfer credit cards and learn much more about the benefits and dangers in our comprehensive guide to balance transfer credit cards.