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.

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