Bank of America May Have Removed Balance Transfer Fee Cap
Bank of America is one of my main sources for credit card arbitrage (the other one is Chase). Though I have only two cards with them and they are both more than 5 years old, I constantly got 0% balance transfer offer in the mail with no or very little fee. I don’t really know why they kept offering me the free loans (of course, I have to pay the one time balance transfer fee) as I never used the card to make any purchase. Right now I have $30K borrowed from BoA with $90 fee. At the time when previous favorite such as Citibank lifted caps on balance transfer fees, BoA for a while continued to put a lid on the cost of transferring balance. However, the joy of free money seems to come to an end.
Yesterday, I noticed a discussion on FatWallet forum about BoA removing the balance transfer fee cap. Since I didn’t get any notification myself (maybe it will be coming), I wasn’t quite sure about the news. Then I did a quick check on BoA’s website for their credit card offerings and found that the change may have already happened. For example, the BoA WorldPoints MasterCard’s T&C has this paragraph regarding 0% balance transfer and fees:
0% Introductory APR on balance transfers and cash advance checks for your first 12 billing cycles† (subject to a 3% transaction fee, no less than $10)
Similar wordings of balance transfer fees are also found on the application page of some popular cards such as Visa Signature with WorldPoints card, as well as the Reward AMEX card and the Cash Rewards Platinum Plus MasterCard. Though I didn’t go through all the cards, it appears that the shift in policy has already occurred.
At 3% fee, the balance transfer is not as appealing as the deals with a fixed fee as the more money transferred, the higher the fee paid and the whole idea of making money from balance transfer is to borrow a large amount of money at 0% and save it in a high yield savings account. Though money can still be made if the borrowed money is deposited in an account with a 5.30% yield, I don’t think I will bother to play the arbitrage game anymore.
Will this become a trend for card issuers?
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