Balance Transfer Arbitrage

I bet that you have never read your credit card’s terms & conditions very closely, well neither have I. However, it’s not uncommon for the T&C’s to say “We reserve the right to change the terms (including the APRs) at any time for any reason, including no reason.” That’s right, the terms & conditions will say that they have the right to change the interest rates of your credit card debt for absolutely no reason whatsoever!

Unfortunately, this means that if you get a 12 month 0% balance transfer from a credit card company, they can change the interest rate on you whenever they want to. The only stipulation is that they notify you in writing thirty days beforehand, which doesn’t give you much time to react, does it?

Fortunately, they usually won’t do this for no reason because that would be some terrible PR. However, if you miss a payment, have a change in your FICO score, or have any adverse change to your credit; they will often use that as leverage to increase your interest rate.

So, when you get a 0% balance transfer, keep this one bit of information in mind. In fact, if you have those T&C’s around, scan them to see what they say.