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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9 Responses to “Bank of America May Have Removed Balance Transfer Fee Cap”

  1. Kevin |  Sep 06, 2007 at 2:15 pm

    That is why it is good to live in a free market. Once people that actually use the balance transfer for their purported purpose start to get hit with these fees, another credit card company will move it back to a transaction fee limit or none at all.

  2. Kyle |  Sep 06, 2007 at 4:47 pm

    Good while it lasted. Although as Kevin referenced I don’t think this is the last of 0% balance transfers. To much money to be made from people who cannot pay the money back at a given time.

  3. Tim |  Sep 07, 2007 at 4:13 am

    BofA, like others, just wanted you to use your cc since you weren’t using it. to entice you, they sent you the 0% promo. i’m out of arbitrage when my current promos end, too. i had to pay a capped fee on my last, so i put the money into stocks to recoup the fee plus some, then transferred to high yield savings. it is risky, but the market gyrations these days, it’s not difficult to put money into a good stock to recoup the fee amount.

  4. Golbguru |  Sep 07, 2007 at 10:11 am

    Ha ha… didn’t I tell you something similar just a few days ago about why I am calling quits on the arbitrage. :)

    By the way, if you get the time, go over the T&C for other major credit cards in the same post:

    Except Discover, everybody else is squeezing us out. And the problem with Discover is that it doesn’t give a big credit limit.

    There are a few business cards still in the game, but other than the Citi Professional Card (which I already have), I don’t think I am eligible for others. :(

    So, effectively, my arbitrage has also come to an end, unless some miracle happens at this point.

  5. Dangerman |  Sep 21, 2007 at 7:30 pm

    Nope, BOA balance transfers are still capped for me. On one BOA Visa: “The transaction fee for balance transfers is 3% of each transaction, minimum $10, maximum $75…”… on my other BOA Visa: “The transaction fee for balance transfers is 4% of each transaction, minimum $10, maximum $90…”

  6. Sun |  Sep 25, 2007 at 9:49 pm

    Dangerman: The information I got is from their website. Since they usually send me balance transfer offers, I will have a better idea next time when I receive the mail. But it won’t surprise me if they indeed remove the cap as more and more banks are going in that direction.