Banks Woo Clients With Cheap Credit-Card Cash

The four biggest U.S. banks are encouraging their most creditworthy customers to take on more debt, mailing credit-card balance-transfer offers with rates as low as zero percent even as they add fees for other services.

Bank of America Corp. (BAC), the largest U.S. bank by assets, is offering some customers a teaser rate of zero percent plus transaction fees through June 2012. Customers who receive the promotions with balance-transfer checks may deposit the checks to use like a short-term loan, rather than paying off a balance at another financial institution. There is a one-time fee of $10 or 4 percent, whichever is greater, per transfer, according to the terms reviewed by Bloomberg News. JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Wells Fargo & Co. (WFC) are sending similar promotions.

The offers come as the banks add fees for checking accounts to make up for lost revenue from federal rules on debit-card swipe charges. The rates may be a good deal for customers who can precisely follow the terms, as the average rate for an unsecured personal loan is 13.96 percent, said Greg McBride, senior financial analyst for Bankrate.com, which provides consumer rate data.

“It’s a pretty inexpensive way to use other people’s money,” McBride said.

Some customers of JPMorgan, the second largest lender, who receive such offers may write a balance-transfer check to themselves for as much as $5,000 to take out a zero percent loan for as many as 15 billing cycles. Citigroup, the third largest, is offering some customers 0.99 percent on balance transfers through February 2013. Existing customers may deposit balance- transfer checks into their bank accounts to use as cash, according to the terms reviewed by Bloomberg News.