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Balance Transfer Day: December 11, 2011

This article was written by in Credit. 19 comments.


Just last month, Bank Transfer Day encouraged disgruntled consumers across the country to move money out of their bank accounts and deposit the funds in credit unions and smaller, community banks. Partly as a result of this successful campaign, hundreds of thousands of American large-bank customers opened credit union accounts since the day the campaign was founded.

Another idea, though it hasn’t gained nearly as much traction with fewer than 600 Facebook fans signed on, is to leave the large credit card issuers behind by transferring outstanding balances to lower-interest cards, like those offered by credit unions. In an ideal world, customers would, on December 11, apply for a zero-interest, zero-fee credit card and include in the application instructions to transfer a balance from a higher rate card.

To figure out who’s behind Balance Transfer Day, you’ll need to trace it through several different initiatives and apparent organizations, but at the root, this effort was organized by a for-profit company whose primary business is an affiliate-based credit card application website. I’m wary about seriously promoting a movement that, when you look layers deep, is organized for the financial benefit of the parent company. Unlike Bank Transfer Day, organized by a woman with no ties or endorsement by the financial industry, the founders of Balance Transfer Day can be easily but not obviously traced to a site called credit-land.com, which has a “Student Credit Card Education Initiative.” This is not a non-profit organization, it is designed to promote the products of the parent website.

Balance Transfer DayThere is no association between this organization and the Occupy movement, though they attempt to make it appear there is a connection by using the Guy Fawkes mask in the Balance Transfer Day initiative logo and using “Occupy” language.

It’s also worth noting that the Twitter handle for the movement is “OccupyBankRate” — a company called BankRate just happens to be a competitor of the organizers. An article on Huffington Post identifies the founder of the movement, Michael Germanovsky, as a laid-off architect, but the writer conveniently neglects to mention that he is also the editor-in-chief of credit-land.com.

Michael Germanovsky

For Michael Germanovsky’s response, please see the comments below the article.

Regardless of who organized this movement and how the organizers are promoting it, individuals should always do what’s best for their finances. In some cases, that could include transferring balances from high rate cards to cards with 0% introductory APRs for balance transfers. There are potential traps, though. And the big issuers just happen to have been improving these offers recently, eliminating or reducing fees to entice more customers.

  • If you do not pay off the entire transferred balance within the introductory period, you will be subject to higher interest rates, and you could be paying more total interest than you would have if you had left the balance on the original card.
  • If you apply for or open many 0% APR card offers around the same time, your credit score could be negatively affected.

The rationale for the transfer from a anti-industry perspective is that since the large banks receive benefits from the government, like a facility to borrow money at 0% APR, it isn’t right that the banks charge even higher rates to their customers who borrow money. By bailing out Wall Street, the government supposedly intended banks to pass the savings to customers in the form of lower rates encouraging borrowing, but the banks decided to use the funds to keep cash on hand to improve their appearance of financial condition for the benefit of their shareholders. Interest rates have been higher since the bailout than they had been in recent years, but there are less expensive options for borrowing than these major issuers.

At the same time, the best zero-balance transfer introductory offers are still promoted heavily by the major issuers. If you look at the website for the underlying company that organized the movement, they promote Citi, Capital One, and Discover as being the best cards for balance transfers. This is despite the movement’s apparent goal to recommend credit unions and small banks.

As a movement, Balance Transfer Day won’t gain as much traction as Bank Transfer Day. The back story isn’t compelling enough, and the motivation, though well-buried, is profit and promotion for the underlying company.

Will this movement inspire you to transfer a high credit card balance from one card to a zero-interest offer on a different card?

Updated December 7, 2011 and originally published December 2, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 19 comments… read them below or add one }

avatar michael germanovsky

Thats a bunch of balloney. I am not advertising credit-land.com on ant facebook posts or tweeter. I am a personal fi ance expert and write for many websites. I did mention to the journalist from huffpo that i write articles for credit-land so what? Balance Transfer Day is my own initiative protest against credit card companies high interest rates. Its the same as accusing Herman Cain that he ran for president to promote his pizza joint. Good try to create a contoroversy, though!

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avatar Luke Landes ♦127,490 (Platinum)

I’m not trying to create controversy, nor am I accusing anyone of anything, I’m just pointing out a connection that people should know about, and I’m pointing out there is no connection between the initiative and the Occupy protests, whose well-recognized symbols are incorporated in the iniative’s branding. These are issues that are not obvious in the campaign and people should be aware so they can make their own informed decisions. I don’t disagee that balance transfers to low or zero rate cards can help a family’s finances in some cases.

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avatar Sun

I think Chase Slate and a Discover card are currently the only two cards that I know that offer 0% intro APR for 12 months or more, and 0% Balance Transfer Fee.

@Flexo – Thanks for pointing this out. There’s obviously an undisclosed conflict of interest here if the author runs a credit card application site. Other people have said the same.

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avatar shellye ♦107 (Cent)

This “movement” sounds like a guy trying to make a fast buck on the coattails of the Bank Transfer Day event. I would only do a balance transfer to a 0% card if 1) the interest rate after the introductory period were significantly less than any card I was currently carrying; 2) if there were no balance transfer fees (usually around 4% of balance transfer amount); 3) if the rewards the company was offering were rewards I’m interested in; and 4) if it was a 1 to 1 earning situation (1 point or more for every dollar spent).

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avatar Krantcents

No, I do not need a movement to make a decision. If I were unhappy with my bank, they would be gone in seconds.

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avatar Ceecee ♦53 (Newbie)

I’m keeping mine for the rewards. I like the program and its freebies. And I never run a balance so I don’t pay interest.

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avatar wylerassociate ♦162 (Cent)

I am not going to participate in Balance Transfer day nor will I move my credit card to a new card.

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avatar jim

“this effort was organized by a for-profit company”
Wheres the proof for that? Just cause Michael works at credit-land doesn’t mean that credit-land is behind the idea. I have a blog but my day job employer doesn’t endorse or have anything to do with my blog.

I can understand the potential conflict of interest. But how is Michael or credit-land supposed to be profiting from this balance transfer day idea exactly? I don’t see anything on the Facebook site that points to any credit-land or anything. There aren’t commission links to credit card sites. The idea is to use credit unions and credit unions aren’t generally involve in commission based affiliate programs that I’ve seen.

As far as using the Occupy term, I think thats fair game.

Do people really think that the word “Occupy” is owned by some single group?
I don’t think the Occupy movement itself is even a coordinated or consistent unified organization. So who’s to say who can and can’t be part of the “official” movement? Did Occupy Wall Street organizers in NYC explicitly agree to endorse and approve the actions of Occupy Oakland? Or did some people in California start protesting and using he word Occupy?
Seemed inevitable to me that the word Occupy would be slapped in front of various things. Kinda like “got milk?” campaign was turned into “got [insert anything]“.
BTW, my understanding is that Time Warner owns the license for the Guy Fawkes mask design since they put out the V for Vendetta film.

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avatar Luke Landes ♦127,490 (Platinum)

Good points, Jim. And if I were to start a non-profit financial education organization, I would keep that separate from Consumerism Commentary, as well. I would, however, feel it might be a conflict of interest if my non-profit financial education organization encouraged the people it was educating to sign up for cash back credit cards and convinced them to search Google for cash back credit cards. There’s a good chance someone who does that will end up generating profit for Consumerism Commentary. And that, in a nutshell, is what Balance Transfer Day does through its Facebook page with a link to a Google search result.

There’s a bit of “search engine optimization” at play here, and again, and it’s not obvious to most people who see the campaign. It might not immediately benefit credit-land, but the campaign as a whole doesn’t hurt the banking industry as much as it claims; in fact, if 600,000+ people transferred balances like the (apparent) result of Bank Transfer Day, it could be a big boost to the banking industry… and those who generate sales for the banking industry (yes, including Consumerism Commentary)… because most of those transfers will not be going to credit unions, they’ll be going to large banks that offer the 0% intro APRs. (And again, that could be the best option for someone from a purely financial perspective if they’re careful about their payments.)

I’m not claiming they don’t have a right to call the campaign “Occupy” anything, but the potential consequences are antithetical to the overriding ethos of the Occupy protests. Bank Transfer Day came from someone from the outside (well, a credit union customer), but this has its roots from deep within the industry, though it appears to be an “outsider” movement started by a laid-off architect.

*OR* maybe I’m just sad I didn’t think of the idea first. (grin)

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avatar Michael Germanovsky

Flexo, if you want to abide journalism ethics of reporting truthful and non-bias news than you should have done what the authors of those articles did – interview and do all research and than present all facts in a non bias form without any speculation like: I’m wary about seriously promoting a movement that, when you look layers deep, is organized for the financial benefit of the parent company. Where is the proof that Credit-Land.com finances Balance Transfer Day? And why do we need one if Balance Transfer Day messages in all of their posts never advertise Credit Land. By saying that someone might coincidentally use Credit-Land.com by randomly finding them on Google, when joining me in protest against high interest rates on December 11 2011, is far fetched. Same way you can say that you will profit faster by plugging a link to credit cards that you sell on your site in this article. I am willing to take a polygraph test in front of U.S. Congress that I started Balance Transfer Day because I hate high interest rates that are imposed on debt. Studying personal finance and expressing my credit card knowledge on Credit-Land as well as on TheEpochTimes.com, Benzinga.com, BeforeItsNews.com, Allvoices.com, Cnn IReport, and on my blog in USA Today community can only show that my protest against high rates started because I monitor Credit Card Industry. The knowledge gave me the idea that Banks, considering 2008 bail out, are too greedy by upcharging 3.25 Fed Rate up to 30%, and have room to lower their rates. So I blew a whistle and started a protest, which is supported (unlike you are saying) by Occupy Movement, who closely follows and rewteets my calls to end high interest debt.
People can do Balance Transfer any day. I call on all of you to join me December 11 2011 and do a Balance Transfer so that our unanimous action will send banks a message that this is not the time to be greedy – it’s time end high interest rate on debt. Please also sign our petition in support of U.S. Senator Sheldon Whitehouse proposed legislation to allow states to cap high interest rate on credit cards. http://www.change.org/petitions/balance-transfer-day-legislation

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avatar Luke Landes ♦127,490 (Platinum)

Michael,

There’s a lot to respond to here which I’ll look past rather than get into an argument, and we disagree on some fundamentals about what should have been disclosed when you promoted this event, but I think we both agree that high interest rates are bad. Unfortunately, a mass Balance Transfer day will not send any message to banks other than, “Thanks for the offers! We’ll sign up and give you our money, just like you want us to. We’ll even open a new line of credit to do so.” On an individual level — do what’s best for a household’s finances, but realize that wherever you’re transferring your balance to, you’re helping the industry, not sending a message of defiance. It puzzles me that the Occupy movement would support that.

Want to send a message to Big Banks? Pay *off* your debt and end your reliance on borrowing from the industry, don’t just transfer the debt somewhere else. I realize that’s not as simple as it sounds, and transferring debt to a low rate card is a good way to put debt payoff within reach… but it’s the only way to truly send the message you’d like to send.

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avatar Jenna, Adaptu Community Manager

I think my rates are pretty decent right now. No changes for me.

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avatar Randy Barnett

I don’t carry a balance on any of my cards, so I won’t be transferring. When I have felt that any company was charging too much, I shopped somewhere else. If I carried a balance and the rate was too high, I’d change it immediately.

I don’t think transferring balances on 12/11 will send a message anymore than changing banks sent a message. That’s not the way to get banks to listen. Instead act as an individual in your best interest. If you have a balance, put it where the rate is the lowest.

The biggest problem with balance transfer is that it will HURT the individual, not help them. Most individuals will not pay off the balance and will not be better off. They’ll keep paying on credit cards for the rest of their lives.

What’s needed is a change of heart, a decision that you WILL pay off all debt. Then a transfer helps because you will pay it off before you get hit with high rates.

The author’s ties or lack of ties to credit-land don’t influence me one way or another.

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avatar Maggie@SquarePennies

I’m not doing any balance transfers as I am happy with my Discover card. We are also happy with our credit union and I highly recommend opening an account with one if you haven’t done so yet. It is more like a small-town bank and you get real personal service. Small town banks can actually be owned by a large bank holding company, so do your research before switching to a small town bank if you are wanting to avoid large bank corporations.

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avatar Cejay ♦1,521 (Half-Dollar)

I am not doing a balance transfer. I pay off my credit card monthly and pocket the rewards. But I must admit that other than your blog I have not heard of this movement.

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avatar Evan

While I see your point Michael about the separation between the “entities” can you at least admit it is a bit odd that someone who hates interest rates writes a website that makes their profits promoting credit cards, some with terrible APRs?

It would be like someone who is a vegan writing on BuyMeatHere.com and then claiming they are doing it because they want to educate on not buying meat. Just seems weird.

That being said I won’t be participating just because I don’t have a balance to transfer!

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avatar Michael Germanovsky

Evan, I am actually glad to have a chance to write for these websites, because with all the money they grab, at list this is an effort to educate their consumers. I try to put all my personal finance knowledge into my writing with hopes that it will help people. All of my writing is geared to actually how to fight the credit card system. I am free spirit and I don’t want to bow to my loyalty to the man with the dollar – instead I use the welcome to write on their website to help people in debt, like I am doing when I protest high interest rates

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avatar Briana @ Prairie EcoThrifter

I like the idea, but like you said, I don’t know how I feel about a for-profit company being behind it.

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avatar WiseFather

You guys might like this direct action protest I took on my own against one of the big banks. I called my credit card’s customer service line to do some “negotiating.” Having a bit of leverage, I thought it presented a great opportunity to mess with them a little without fear of retribution. I made a video of the call and posted it on my blog along with my comments about what happened and a fuller “director’s cut” transcript. Pay attention to his response to the classic line “Why does Bank of America hate Christmas?” Enjoy. http://www.ragingwisdom.com/?p=508

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