Like most of the new age tactics that have come about using credit cards, the balance transfer does have a bit of a history to it. The history allows the average person not only to understand the beginnings for the balance transfer, but also to potentially extrapolate a pathway to the future for it as well. The history of the balance transfer starts outside Australia but pretty soon the pathways of Australia and the other developed nations of the world vis-à-vis balance transfers intertwine to the point where it is not necessary at all to talk about them in different lights.
Balance transfers have not been formalized agreements enshrined in credit card agreements until fairly recently. Before formalized balance transfers existed however, people were already cognizant of the fact that they could use different credit cards to help alleviate credit card debt. This started with people that would take cash advances from credit cards to pay off other credit cards and in doing so stave off any damage to their credit report for up to months at a time depending on how much credit they had left to work with. These tactics were perhaps a bit crude to be considered the first balance transfers, but they certainly did resemble the early stages of using the credit available on one credit card to alleviate tension caused by debt on another one.
In addition to credit card debt alleviation, people soon began to realize that the interest rates they were paying on their main credit card were usually terrible. For this reason, people started looking around for ways to decrease the amount of interest they had to pay with each statement and eventually began to take cash advances from other credit cards to remove the balance they had on their current one. Only low interest credit cards would have cash advance rates low enough for this to work and when a person started to realize that this was true in some cases, the crude origins of the balance transfer had been laid down for all to see.
Eventually, credit card companies around the world began to realize that people were transferring their balances from one credit card to another, taking advantage of introductory offers in some cases and low interest rates in other cases. This actually took most credit card companies a surprisingly large amount of time to figure out but once they had figured it out, the stage had been set for a transition towards formalized balance transfer packages. The country of Australia was at the front of the pack along with the other developed nations in terms of their companies developing formal balance transfer arrangements.
When these balance transfer arrangements were introduced into the Australian credit card market, at first they did not meet with a whole lot of success. People that had already been doing de facto balance transfers beforehand found some benefit from going through the formalized arrangements, especially considering the fact that many of them came with introductory offers. However, the other people really had no use for balance transfers just yet and for that reason many of the specialty balance transfer cards ended up losing their company money until they were finally discontinued. Balance transfers remained on other cards, but many of the first generation balance transfer specialty cards never turned a profit.
History has a strange way of repeating itself however and in recent years with the economic uncertainty plaguing many people as well as the general overspending of the population, balance transfer credit cards have made a big return. There are many people that build up debt through improper money management and then end up turning to balance transfer credit cards as a way to offset that debt.
As soon as this started happening in large numbers, many of the credit card companies began reissuing balance transfer specialty cards and found quite to their pleasant surprise that this time around the cards began to get a lot of traction in the Australian credit card market. Balance transfer credit cards now represent a very large portion of the Australian market and the future looks nothing but bright for cards of this type.
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Posted on Friday, March 26th, 2010 at 3:39 pm
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