Zero balance transfers destroying value

Credit card issuers offering zero interest on balance transfers were running a high risk of destroying value in their lending business, Commonwealth Bank said. CBA said there was anecdotal evidence that borrowers were using balance transfer offers to raise large cash advances and reduce principal on their home loans. When the zero interest period ran out they arranged a new balance transfer to another card issuer. CBA said the bank's break-even on a genuine new credit card customer was 12 to 24 months.

Advertisements