The card issuers gain new customers, knowing that these holders are prone to accruing debt rather than regularly paying off the balance, which makes them a particularly desirable type of client.
In countries such as Australia and Germany legislation requires the card company to instead first apply payments to the highest-rate balances.
[3] By avoiding making purchases or taking cash advances, the borrower can ensure that interest accrued every month is at the low beneficial rate of the original balance transfer.
[4] Promotional balance transfer rates are usually only guaranteed as long as the account is current, meaning the cardholder consistently makes at least the minimum monthly payment.
While the promotional interest rate applies and the minimum payment value remains low the cardholder has little incentive to repay the card balance resulting in prolonged debt.
[6] Card issuers have raised minimum payment requirements to encourage cardholders to pay off their balances.