DEFINITION of 'Rate Tart'

Credit card users who transfer balances from one card to another in order to obtain the lowest possible interest rate. Rate tarts typically make balance transfers when a special interest rate on a credit card balance – often as low as zero percent – is about to run out. As credit card issuers generally offer low interest rates for limited periods of time ranging from six months to one year, rate tarts may have to transfer balances between credit cards at least once or twice a year. The somewhat derogatory term “rate tart” is believed to have originated in the United Kingdom.


Rate tarts can be regarded as engaging in a game of financial musical chairs. A rate tart can stay in the game as long as he or she can find a low-interest card to which credit card balances can be transferred, but the game’s up once they are unable to do so, at which point they have to face the music.

Although this is a financially risky strategy, the punitive interest rates charged by most credit card issuers make the strategy pursued by rate tarts one worth considering for consumers with a high level of credit card debt. While many institutions levy a transaction fee that can range from 1% to 5% of the transferred amount, the cost savings from lower interest expense can be substantial, even after accounting for the fee. A credit card balance of $5,000 carried for a year at a 15% rate of interest would result in interest expense of $750. But a zero percent transfer offer with a 2% fee would only cost the consumer $100, resulting in a savings of $650.

The practice of frequently transferring credit card debt may affect the credit scores of rate tarts, especially if balance transfers result in credit cards getting close to their credit limits.

  1. Balance Transfer Fee

    A fee levied by a credit card issuer when a balance is transferred ...
  2. Zero Balance Card

    A credit card on which a consumer does not owe any money because ...
  3. Secured Credit Card

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

    Credit card funding is the use of a credit card account to provide ...
  5. Business Credit Card

    A business credit card is a credit card intended for use by a ...
  6. Terms And Conditions (Credit Card)

    A formal statement of the rules and guidelines that govern the ...
Related Articles
  1. Personal Finance

    How Credit Card Balance Transfers Work

    The pros and cons of credit card balance transfers.
  2. Personal Finance

    The Pros And Cons Of Balance Transfers

    Do the math before you assume that transferring your credit card balance to a lower rate card will save money. It could – or it could cost you.
  3. Personal Finance

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  4. Personal Finance

    Best Credit Cards For 2015

    The best credit card for you depends on your financial goals. Our choices for the best cards in 4 different categories.
  5. 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.
  6. Personal Finance

    Credit Cards For People With Bad Credit

    Yes, you can get a credit card and start repairing your credit history. But brace yourself for low credit limits, sky-high interest and staggering fees.
  7. 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.
  8. Personal Finance

    5 New Ways Credit Card Companies Are Wooing New Card Holders

    With new laws, credit card companies are forced to get creative to attract new customers.
  9. Personal Finance

    Breaking Down Credit Card Fine Print

    Those "perks" offered by credit card companies usually come with strings attached, and these are just a few of them.
  10. Personal Finance

    What happens when your credit card expires?

    Find out why it's a good idea to change and update your credit card once in a while. Learn about other cards that may better suit your needs.
Trading Center