Consumers Take A Break From Credit Card Hopping
Only 15% of credit card holders transferred a balance in the past year, and 43% of those respondents said their last balance transfer was for $2,000 or less. The average balance for those who have cards continues to increase, but consumers are not being enticed to move those balances around as much.
Besides not carrying credit card balances in the first place, the biggest reason given for the shift is that more companies are charging balance transfer fees--usually about 3%--which is a turnoff to customers, says Megan Bramlette, managing editor of ACG's "Cardbeat."
Historically, many companies waived balance transfer fees for the first 60 or 90 days of having the credit card. "The no-fee offers have largely gone away," Bramlette tells Marketing Daily.
Even more impactful for consumers is that whereas transfer fees were previously capped at $75 no matter how much a consumer transferred, most companies have eliminated the cap. "So if you are transferring $2,500, that's $75, but if you transfer more than that, it goes up accordingly and can end up costing you a lot, depending on how much you are transferring."
Issuers are making balance transfers more expensive to support profitability, Bramlette says.
Another factor discouraging balance transfers is that people are happier with their credit card companies as of late, and are pleased with loyalty/rewards programs.
The survey polled 399 credit card holders in April 2007 and was recently published in "Cardbeat," a monthly market research report that provides insight into how consumer perceptions impact credit card acquisition and usage.