Given that credit card companies have access to your credit information, why do they keep advertising balance-transfer options to people who have great credit and never carry a balance?

What balance are these people supposed to transfer exactly? Why should they?

  • 5
    Because unless the card is being reported as $0 balance, they don't know that you're not carrying a balance.
    – quid
    Apr 15, 2016 at 19:40

4 Answers 4


This is a US-centric answer, which may not apply in other countries.

Given that credit card companies have access to your credit information, why do they keep advertising balance-transfer options to people who have great credit and never carry a balance?

TL;DR answer: The credit-card companies hope that you will accept the offer so they can make a quick buck off you that they otherwise have no chance of extracting from you.

The phrase "never carry a balance" means that the card-holder is paying each month's statement balance in full by the due date and is thus not charged any interest on purchases. Generally, people with excellent credit scores receive balance transfer offers (and often checks that can be used to pay taxes or auto loan payments etc or deposited into personal accounts) which are indeed charged 0% interest for 12 months or 18 months etc, but which have a "service charge" of 2% to 5%. Those "0% interest for 12 months and no service charge" offers that you see in advertisements are sent to people with middling credit scores. For what happens when someone used to paying off each month's statement balance in full accepts a balance transfer offer, see this previous answer of mine.

All credit-card companies that I have used set the minimum payment due on each monthly statement to be the sum of (i) all interest accrued over the previous month on earlier purchases, (ii) all interest on cash advances from previous months as well as the current month, (iii) all service charges (including annual fees, cash advance fees etc), and (iv) 1% of the sum total of all purchases and cash advances that have not been paid as yet. The statement balance includes everything that is currently owed including the 0% rate amount. But what if you (someone used to paying off each monthly statement in full) have just accepted a 0% balance transfer offer of (say) $10K with 2% service charge? You have no past unpaid purchases or cash advances, but do have current purchases of (say) $4K. The full statement balance is $10K + $200 + $4K = $14,200 while the minimum amount due is $200 + 1% of ($10K + $4K) = $340. So you decide to pay $4200 by the due date in the belief that you have paid off all your current purchases and the service charge, and so you are all clear for next month. Buzzt! Not so at all. Any time that you pay less than the full statement balance, the CARD Act says that the minimum amount due part can be applied to any part of the statement balance; it is only the excess, if any, over and above the minimum payment amount that must be applied to that part of the balance that carries the highest interest rate (and then to the part of the balance with the next highest interest rate and so on till all the excess amount is used up). So, of your $4200 payment, $340 will pay off part of the 0% loan balance of $10K, and the rest will be applied to the service charge (paid off completely) and then to the $4K purchase balance. Worse yet, your account changes status from "Last month's statement balance paid in full" to "Last month's statement balance not paid in full" and so all future purchases on the card will be charged interest from Day 1, and so will those purchases that you didn't pay off be charged interest. That is, there is no 25-day grace period anymore. If you want to continue using your credit card, the only way to do it is to pay the whole $14,200 statement balance by the due date of your next statement. In short, you will have paid $200 as "interest" on a loan of $10K for a period of 26 through 55 days depending on when in the billing cycle the balance transfer occurred. (Note that the $200 you are paying is technically a service charge, and is not subject to usury laws that forbid exorbitant interest rates).

For those people with less than stellar credit who don't look at the credit card statement closely each month and simply pay the amount shown as the minimum amount due each month, a 0% balance transfer offer with no service charge is, for the credit card company, the gift that keeps on giving (which is why they can offer no service charge). Their customer is paying off the 0% amount due, and none of the payment is being applied to the interest accrued last month, and so the interest-bearing part of the balance is increasing! Furthermore, 12 or 18 or 24 months later, the customer is quite likely not to have the wherewithal to pay off the remaining 0% balance, and so the (waived) interest on the 0% balance also becomes un-waived etc.

  • The trick here (for the user) is to transfer to a card with $0 balance, and then don't use the card for anything until the balance is back to $0.
    – jamesqf
    Apr 19, 2016 at 22:26
  • +1 this is exactly the type of answer I was hoping for, thank you for explaining it so clearly in detail!
    – user541686
    Apr 19, 2016 at 22:37

Because it costs them maybe fifty cents to mail you the advertisement, and if you take the offer they make thousands of dollars off of you. Even if you have a 0.1% chance of accepting the offer, they still stand to make money on the deal since they're sending thousands of them out.

They're also not pulling a credit report every time they do this - so they don't know necessarily if you have a balance on other cards. After all, people's circumstances change all the time; even if last year you didn't carry a balance, this year you might be.

Also note that your carrying of a balance doesn't show up directly on the report - some cards report your balance as of statement date, for example, so you'd always look like you had a bit of a balance even if you paid it in full every month.

  • 1
    Yes, it's the exact same logic behind spam e-mail and junk snail mail. It costs very little money to blanket the entire population with this crap, and every person who responds is easy money.
    – dg99
    Apr 15, 2016 at 21:26
  • I don't quite see how the make thousands of dollars off of me. Say I transfer $10K to a card that offers 0% interest for a year, and the transfer is 2%. Where else can I borrow $10K at 2%? Of course if I were silly enough not to pay it off by the end of the 0% period, I'd get stuck with interest charges, but I'm not :-)
    – jamesqf
    Apr 16, 2016 at 4:01

Most credit card balance transfer offers can also be applied to car loans, HELOCs, or even mortgages.

Whether or not it's a good idea to do so is another discussion.

  • They send these offers even to people who have none of those, though. Is this simply because they're not aware? I'm skeptical that they don't know my credit history considering that they "pre-approve" people for credit and sometimes they already have the same people on other credit cards from their company...
    – user541686
    Apr 15, 2016 at 19:55

Many credit card balance transfer offers allow you to take the money as cash and do whatever you'd like with it. Sometimes this makes sense even for someone with no debt, simply because they wish to take advantage of a low interest rate loan (oftentimes 0% and sometimes with no fees too). You could even just take the money and toss it in an interest bearing account and turn a small profit.

Note: if you do choose to accept a balance transfer offer and take the money as cash, check the fine print, as oftentimes they have two different APRs that go into affect after the promotional term ends. The cash APR rates are typically higher than the APR for purchases or balance transfers. If you manage to pay off the balance before the promotional term ends, then obviously this doesn't matter.

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