A Credit Card Tart – are you one?
Edited by Honey B Wackx
Things that are sweet or tart have a special to many people. But have you ever heard of a credit card tart? Some people use the word tart as an insult; others make fun or a joke of it. Either way, it’s not the sort of term you associate with financial matters, especially credit cards.
A credit card tart is a person that moves from one credit card to another credit card, taking advantage of the best offers. In the process, that person can save hundreds of dollars, depending on their balance. It’s also possible to sometimes make money as well. That sounds pretty sweet to me, making money from credit cards when normally one loses money using credit cards.
Being a successful credit card tart takes some knowledge and a lot of organization. The knowledge has to do with finding out which preferential rate deals are available. The organization part comes in remembering when you need to switch from one card to another. That cannot be when you feel like it or at random!
The Inside Scoop
Many credit card companies offer incentives to get customers to sign up. Some incentives are low balance transfer rates. These allow people to transfer balances on which they are paying a high rate of interest to credit cards with a lower rate of interest.
Sometimes this interest rate is as low as 0%, although this is usually only available for a limited time period of between 6 – 12 months. Other balance transfer incentives offer a low rate for as long as the balance transferred stays on the card.
Credit card companies hope that people who take advantage of these incentives will remain with them even when the preferential period runs out. Many people do, but credit card tarts use these incentives to their advantage. Instead of keeping their debt on the same credit card, credit card tarts move their balances from card to card, taking advantage of the best offers. This is also known as ‘rate surfing’.
Rate Surfing: Making The Most of it
Rate surfing can save hundreds of dollars since people who are enjoying a low or zero balance transfer rate are able to pay off some of the balance when making their payments.
To make the most of rate surfing, read the small print carefully to see what transactions the preferential interest rate applies to. There may be a different rate for withdrawing cash, using credit card checks or making purchases.
Keeping a Good Credit Rating
The key to being a successful credit card tart or rate surfer is to make all the credit card payments on time. Late payments will affect your credit rating. A poor credit history will make it harder to get a new card the next time you want to take up an offer.
Credit card companies have gotten wise to rate surfers and credit card tarts. Many of them have introduced a one-time balance transfer fee. This is usually a fixed percentage of the balance transferred. In some cases, there is no cap on the fee, so transferring a large balance could incur a huge fee. This is a way for credit card companies to make rate surfing less attractive.
Rate surfing or credit card tarts costs the credit card corporations hundreds of thousands of dollars in lost interest each year. Unfortunately a balance transfer fee is just another way credit card companies can gouge customers by offering a good deal, then taking a good part of it away by the fee.
Credit card companies are also becoming very selective about who gets their credit cards. This is another way of clamping down on credit card tarts, so if you’re a credit card tart, enjoy it while it lasts. Know that many credit card companies share information between themselves. That’s just one more way to keep credit card risks lower and also rein in credit card tarts.