The End Of Balance Transfers As We Know It?

Today I discovered Amex is ending balance transfers for all new customers. Let me be honest, I was gobsmacked. This is quite a momentous decision in the credit card market. For one of the UK’s biggest players to totally turn its back on cheap debt switching offers, is a smack across the face for those seeking to reduce the cost of existing borrowing. Let’s get this straight, it isn’t just a change of ‘offer strategy’, it’s a withdrawal from the balance transfer market as a whole – that’s a radical first.

Its stated reason is that it wants to concentrate on cashback and reward type offers, but it’s been doing these for a while anyway. The truth is that customers correctly using their cards hurts. If people follow my ‘never, ever, ever spend on a balance transfer card’ rule, then Amex won’t be making money from its balance transfer offers.

At the moment there is no panic, the next best equivalent card isn’t far behind (see Best Balance Transfer Article), but the real worry is if this strategy is adopted across the market as a whole. That’s a little far fetched, but it is no exaggeration to say the balance transfer top offers market has retracted. With only negligible rises in interest rates (compared to credit card rates that is) we’ve seen 0% offer lengths get shorter, the introduction of balance transfer fees and now Amex withdrawing from the market as a whole.

In one way we should cheer hoorah! The savvy consumer is starting to get the better of the debt industry, yet the cost could be the market’s competitiveness. I still think we’re a long way from that, I don’t believe the end of tarting is upon us just yet. There are still many great cards out there – and the saving grace is as the market contracts, it becomes less costly to beat your competitors with a market leading deal. Yet Amex’s announcement is a wobble!

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