Seeking Alpha

Credit-card firms angle for new business with 0% teasers

  • 0% balance transfers are nothing new, but today's teasers come with unusually lengthy periods - up to 2 years - and are being offered to a wider swath of customers than in the past, say industry executives (anyone who lived through the last credit cycle will find that hard to believe).
  • Naturally, it comes with a catch, and lenders make money by charging a one-time transfer fee - typically 3%. Kudos to the credit card operators for slipping "0%" by regulators, while charging 3%.
  • While JPMorgan (JPM), Citigroup (C), and Discover (DFS) are among those aggressively going after the business, American Express (AXP) CEO Ken Chenault isn't a fan. "Putting out a substantial number of 0% offers doesn't appear to target the affluent prospects some competitors claim to be after, nor is it a net revenue driver over the short term," he told investors earlier this month.
  • The others claim the practice allows them to grow their loan portfolios after they shrank dramatically in wake of the financial crisis.
Comments (2)
  • philipmax
    , contributor
    Comments (251) | Send Message
     
    Fleecing the innocents. Miss one time and you are screwed!
    27 Aug 2013, 09:06 PM Reply Like
  • dilligaf30
    , contributor
    Comments (12) | Send Message
     
    Not sure what "slipping "0%" by regulators, while charging 3%." means. Although the terms may my longer than average, issuers have been doing these types of offers for years. It's always seemed to me to be properly disclosed of you actually read the T&C.
    28 Aug 2013, 09:28 AM Reply Like
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