Getting a new credit card at the moment, during the infamous credit crunch, may seem like financial suicide but this isn?t really the case. There are many reasons why getting a credit card at the moment may actually be a good idea. In fact there are signs that the credit card industry is becoming more competitive, and more eager, to attract new customers and because of this many great deals are appearing. Although it may be more difficult to be accepted for a new card, once you have been they can in fact offer good value for money.
"I am not a number - I am a free man" shouted Patrick McGoohan in hit 60''s sci-fi 'The Prisoner' - unfortunately from a financial services point of view you are more of a number. Whether you like it or not your credit rating records every financial decision you have ever made - be it good or bad. It also records every repayment you have made and whether you have made it on time - or not. If you have a strong credit rating you will be most likely be accepted for new card. If you have a bad credit rating it is sensible to work on your rating, as applying and being declined can have an adverse affect. Also bear in mind that, at the moment, 20% less people are being accepted than in the past as lenders undergo a serious tightening up of their lending criteria.
The majority of those looking to change cards are doing so because they want to take advantage of 0% on balance transfer offers. In many cases this reduces monthly repayments and means that you can avoid paying interest on the amount you have borrowed, if only for a limited period. One way that card companies are attracting new customers currently is by making these 0% balance transfer offers more attractive. Some of the newest offers are highly competitive and, in some cases, even better than they were a few months ago.
The interest-free period on balance transfers varies from card to card. The smallest period is around 5 months and the longest is around 15 months. Most cards also charge a balance transfer fee of around 2.5% although, once again, this varies from card to card. If you look online you will be able to compare all of the cards available and see exactly what is on offer for yourself.
One interesting development is that certain companies are beginning to offer cards without balance transfer fees. The fee was introduced to stop people from transferring balances again and again. Originally all cards were feeless. Nowadays it is harder to find cards that don?t have a balance transfer fee; in fact currently there are only 7 on the market. Now it seems that, in order to attract new customers, fees are once again being scrapped. Whether this is a trend that will continue has yet to be seen. Other cards are streamlining their services and getting rid of some of their charges, such as cash withdrawal charges and foreign exchange fees.
As you can see, despite the current situation, there are some great offers being developed. Basically, if you have a strong credit rating, now is a good time to change cards rather than shy away from credit altogether. As you won?t be paying interest on your balance you will actually be saving money. Financial experts recommend that once you transfer your balance you should focus on repaying the amount rather than using the card to make more purchases. Although this is commonsense in practise this may be impossible. It is wise however to use the card as little as possible, perhaps only in emergencies, and take the opportunity to pay back as much as you can.
"I am not a number - I am a free man" shouted Patrick McGoohan in hit 60''s sci-fi 'The Prisoner' - unfortunately from a financial services point of view you are more of a number. Whether you like it or not your credit rating records every financial decision you have ever made - be it good or bad. It also records every repayment you have made and whether you have made it on time - or not. If you have a strong credit rating you will be most likely be accepted for new card. If you have a bad credit rating it is sensible to work on your rating, as applying and being declined can have an adverse affect. Also bear in mind that, at the moment, 20% less people are being accepted than in the past as lenders undergo a serious tightening up of their lending criteria.
The majority of those looking to change cards are doing so because they want to take advantage of 0% on balance transfer offers. In many cases this reduces monthly repayments and means that you can avoid paying interest on the amount you have borrowed, if only for a limited period. One way that card companies are attracting new customers currently is by making these 0% balance transfer offers more attractive. Some of the newest offers are highly competitive and, in some cases, even better than they were a few months ago.
The interest-free period on balance transfers varies from card to card. The smallest period is around 5 months and the longest is around 15 months. Most cards also charge a balance transfer fee of around 2.5% although, once again, this varies from card to card. If you look online you will be able to compare all of the cards available and see exactly what is on offer for yourself.
One interesting development is that certain companies are beginning to offer cards without balance transfer fees. The fee was introduced to stop people from transferring balances again and again. Originally all cards were feeless. Nowadays it is harder to find cards that don?t have a balance transfer fee; in fact currently there are only 7 on the market. Now it seems that, in order to attract new customers, fees are once again being scrapped. Whether this is a trend that will continue has yet to be seen. Other cards are streamlining their services and getting rid of some of their charges, such as cash withdrawal charges and foreign exchange fees.
As you can see, despite the current situation, there are some great offers being developed. Basically, if you have a strong credit rating, now is a good time to change cards rather than shy away from credit altogether. As you won?t be paying interest on your balance you will actually be saving money. Financial experts recommend that once you transfer your balance you should focus on repaying the amount rather than using the card to make more purchases. Although this is commonsense in practise this may be impossible. It is wise however to use the card as little as possible, perhaps only in emergencies, and take the opportunity to pay back as much as you can.
About the Author:
Daniel Watson writes for finance related websites on a regular basis. Read more information on the credit card subject and balance transfers here.
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