How the Credit Card Act of 2009 Killed 0 Percent Balance Transfer Offers

US congress government recently issued The Credit Card Act of 2009, drafted to stop exploitation of consumers at the hands of credit card companies. The Act checks on a credit card company’s discretion to increase interest rates on already running accounts. It restricts universal practice adopted by card issuers, of hiking rates when the credit score of a consumer drops or he defaults on some other repayment.
A 0 balance transfer credit card comes with a system of two interest rates in one account. The much advertised 0% interest rates applies to the transferred debt while the current purchases will be accounted on the general market interest rates. Whatever repayment is made over and above stipulated amounts also goes for reduction in amount of debt that is interest free. It actually works in this manner to debit a large amount of interest on the card and by the time you will be repaying whole of the debt, there would be a debt waiting to be cleared, which won’t be 0% anymore. This makes people find themselves in a situation that is worse they were earlier in.
The Credit Card Act was made to bring an end to this practice. The very fundamental of the 0 balance transfer card is broken by the regulations of this act. It says whatever is paid on the card should be apportioned equally over the existing debt and fresh purchases, including interest on it. Though it was intended to save consumers from immense hassles they found in earlier system, it is not working exactly the way it was planned. As a result of the strict regulation, the banks have withdrawn their 0 balance transfer schemes from the market. Even the time period of promotional rate has come down to as low as 6 months.
Also, number of offers has reduced by 90% and new offers are hard to find. Not just that, scrutiny of consumers has gone stricter than ever. If this goes on like this, 0 balance transfer credit cards will soon become history.