What is a 'Rate Tart'

A Rate Tart is a colloquial, derogatory term for a credit card user who serially transfers balances between credit cards in order to take advantage of lower interest rates.


A Rate Tart is a slang term for a credit card user who swaps balances from one card to another with the goal of maintaining the lowest possible interest rate. The term relies on a Britishism for promiscuity, suggesting that the term originated in the United Kingdom to describe cardholders who engage in this practice.

Credit card companies often offer very low introductory rates on new cards, and periodically offer special interest rates to encourage new business. Some card companies will feature short-term interest rates as low as zero percent for periods that run from six months to a year.

A rate tart may attempt to take advantage of these low rates to transfer balances from card to card in order to evade accruing interest at ordinary rates, which means that a person engaging in this practice may need to swap balances between accounts every six to twelve months.

Risks and Rewards for Rate Tarts

This is a risky practice, in that once the rate tart is unable to transfer the balance to a new low-interest card, they will begin to be liable for the full interest rate on their current balance. Nevertheless, consumers with high credit card debt can often find this to be a temporarily attractive strategy for managing debt, especially when a high balance is accruing a high, punitive interest rate.

Transaction fees for balance transfers can range from one percent to five percent of the balance transferred, but these fees can often be justified by debtors with a significantly lowered interest rate, even if that low rate is only available for a short period of time.

A debtor with a 15 percent interest rate on a $5,000 credit card balance will owe an additional $750 over a year, but if that debtor can transfer that balance to a card with a zero percent rate for its first year and pay a three percent transaction fee for that transfer, the debtor can pay out $150 in fees to the new card company and save $650 for that year.

Not only does a rate tart run the risk of running out of options for advantageous balance transfers as time goes on, the practice also makes the debtor vulnerable to a diminished credit score, particularly if transferred balances bring cards close to their credit limits.

  1. Purchase Rate

    The purchase rate is the interest rate applied to purchases made ...
  2. Secured Credit Card

    A secured credit card is a type of credit card that is backed ...
  3. Credit Card

    Issued by a financial company giving the holder an option to ...
  4. Universal Default

    Universal default allows a credit card company to raise a card’s ...
  5. Credit Card Arbitrage

    Credit card arbitrage involves borrowing money at a low rate ...
  6. Go-To Rate

    A go-to rate is the interest rate that will come into effect ...
Related Articles
  1. Personal Finance

    Everything You Need To Know About Credit Card Rates

    Understanding credit card rates will help you choose the right credit card, and avoid any unpleasant surprises.
  2. Personal Finance

    How to Transfer Credit Card Balances to a New Card

    Before you read that new credit card's zero percent interest balance transfer offer, see our guide to help save money and pay down your existing debt.
  3. Personal Finance

    The Credit Card Balance Transfer Trap

    Before you transfer a balance to a credit card with a lower interest rate, understand how it affects new purchases and other fine-print traps that can cost you.
  4. Personal Finance

    0% Balance Transfers: Can You Beat the Odds?

    Before you accept that 0% balance transfer offer, understand why you got it and who will probably profit most. Only accept if you can beat the odds.
  5. Personal Finance

    Credit Card Debt: America’s Biggest Struggle?

    Dealing with credit card debt is a huge struggle for many American families. Here are some tips to get you started.
  6. Personal Finance

    4 Best Credit Cards for 2018

    If you have good credit, card companies are competing for your business. Here are some of this year's best deals and credit cards you should look at.
  7. Personal Finance

    Credit Card Review: Chase Slate

    Take a closer look at one of the most popular balance-transfer credit cards on the market: the Chase Slate card with a 0% balance transfer fee.
  8. Personal Finance

    Best Credit Card Features For Students

    Students should look for credit cards that charge no annual fees, have a low introductory interest rate and offer rewards or money.
  9. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  1. Are balance transfers worth it?

    Balance transfers on credit cards are often a way to save a lot of money over the short and medium term. Read Answer >>
Trading Center