WARNING: Some 0% Credit Cards Will Cost You A Fortune

395790_3700.pngSome time back I wrote about the AT&T Universal Card “0% balance transfer offer” that really costs 6%. Well I received another offer from AT&T Universal Card with the same hidden “gotcha”. Here’s the problem. Like many 0% credit card offers, the AT&T card has a balance transfer fee of 3%. Unlike most offers, however, there is no limit on the fee. In other words, to get “0%” for six months, you have to pay an upfront transfer fee of 3%. On an annualized basis, you end up paying 6% for AT&T’s “0%” offer. So this time I called AT&T and here is how the conversation went:

Dough: Just to be clear, there is no limit on the 3% balance transfer fee, correct?

AT&T Rep: [Pause] There is a balance transfer fee of 3%.

Dough: And the fee is based on the amount of the transfer, there is no limit to the fee?

AT&T Rep: That’s correct, but it’s just a one time fee.

Dough: [Pause] [More pause] So in other words, I’m paying a 3% fee to get 0% interest for six months?

AT&T Rep: [Pause] Yes, but as I said, it is a one time fee.

Dough: Can you limit the fee?

AT&T Rep: No, I cannot.

At this point I ended the call. What exactly was his point that it is a one time fee? How does that help us? In fact, all it means is that we pay the “one time fee” up front! Let me say that I don’t know how AT&T gets away with advertising a 0% credit card that really costs consumers much more. But forewarned is forearmed. Let’s be careful out there.

Published or Updated: April 26, 2014
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.


  1. plonkee says:

    Wow, you only get to pay it once (until you stuff up in some way). I’d rather get to pay it not at all, or at the very least some sort of cap on the fee amount. I am not into paying for money. It seems to defeat the object.

    • DR says:

      plonkee, I agree. I’ve used 0% offers as a way to save money, but the transfer fees have all been capped at $75, so on a percentage basis, that was well worth the price of admission. With no cap on the transfer fee, you’d be better off with a 4.99% offer for the life of the balance (which many cards are offering).

  2. jm says:

    How are you getting 3% == 6%?

    3% for the first 6 months plus 18% for the 2nd 6 months (when the rate resets) is 12% APY.

    It used to make sense to play the 0% balance transfer game, but increasingly not any more. They used to cap those deals at 3% or $75. If you were sheltering $5k of debt in this way, you were talking 1.5% APY, even less if you had an 18 month deal.

    I’m glad I don’t have to do this anymore.

  3. jm says:

    sorry, make that 10.5%

    • DR says:

      jm, you make a good point. I was assuming that you pay off the credit card at the end of the 0% offer, but if you don’t, the annual interest rate for the first year really goes up.

  4. nuShack says:

    I’ve come to the conclusion that credit cards are nothing but trouble. I’m in the process of paying mine off and getting rid of them. They are a profit center for banks, and a loss center for consumers.

  5. DR says:

    nuShack, with the exception of 0% or very low interest rate cards, I agree. The only credit card we use during the month is an American Express and we pay it off each month. Otherwise, we use a debit card. The 0% or very low interest rate cards (e.g., 2.99%) we use to transfer some of our home equity (from a renovation) simply to save on interest expense.

  6. shadox says:

    That sounds like false advertising to me. But, of course, in this day and age regulators sit on their butts and plan their failed response to the next Hurricane Katrina.

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