2008 turned out to be the year when the financial chickens came home to roost, and its looking increasingly like 2009 will be a continuation of an economic freeze. Financial institutions are nervous, and even the lowest base rate of interest in the Bank of Englands 315-year history has done little to calm a jittery financial market. The common consensus is that the heady days of easy credit are over. However, consumers are still hungry for good credit card deals and have become accustomed to 0% offers and low APR on credit cards. Credit card companies are worried about exposing themselves to bad debt, so are there still low rate cards available to the clever consumer?
The number of advertisements promoting 0% offers has dropped sharply this year. In comparison to 2008, when the present economic crisis was still an unseen storm on the horizon, there has been very little in the way of New Year, new card promotions, even from the larger providers. This absence of new deals has been noticed not just by the public but by financial watchers as well. The financial organisation Credit Action agree with the evidence and say that credit in general and low rate credit cards in particular are in short supply. They also found that where credit was available it was often more expensive than before. The pundits all agree " the banks are tightening their belts and their credit criteria.
However, the popularity of credit cards has not diminished and consumers are still on the lookout for a bargain. Chris Tapp, director of Credit Action says that credit cards are a very normalised part of the way people manage and borrow money, which means that its going to be very difficult to persuade consumers to stop using plastic. Add to this the fact that, although High Street sales may be crashing, online purchasing is on the increase with Ebay and other online auction sites seeing a continuing flurry of activity as customers hunt for bargains. All of these transactions (unless you have a PayPal account) are done on credit and debit cards. So the prospect of the British public turning their backs on their credit cards any time soon looks remote.
Leaving aside the question of 0% balance transfers and focusing purely on purchase rates, there are still some cards that give new customers a 0% grace period for a limited period. Once these 0% offers end though, the APR charged on some cards can sky-rocket, prompting an unseemly scramble by many consumers to start card jumping in the hunt for a 0% balance transfer deal. Frequent card jumping is a quick way to send your credit rating nose-diving " these days the lenders prefer customer loyalty to those who are good at playing the system. In the coming months we may start to see a battle between the leading card providers to keep their customer base stable, rather than going overboard to attract new customers, and that can be backed up by the noticeable lack of product promotion in January.
Rather than joining in the scramble for the 0% offers that are still out there, credit card customers would be better advised to accept that the market has changed and that credit card interest payments are inevitable. Consequently the best thing to do is to look for long-term, low APR rates and cards that dont have too many hidden extras in the form of insurance charges, late payment fees and other handling fees. The days of free and easy lending finished in 2008 and everyone has to adjust their expectations to accommodate a much more bearish market, with caution being the watchword. If businesses have to adjust their parameters then so do consumers.
The Internet has its part to play in the brave new credit card world, and online comparison sites are coming into their own. They give the smart consumer a chance to make an informed decision before they leap blindly into the offer that seems to promise the most financial bling but may have a hidden sting in its tail once the honeymoon period is over. Credit card companies are realizing that there is a groundshift in the marketplace and that, despite the dire financial warnings issued almost daily, the consumer is very much in charge this time around. There are still low rate credit cards to be had, but it all has to be part of a much more symbiotic relationship between customers and credit card companies.
The number of advertisements promoting 0% offers has dropped sharply this year. In comparison to 2008, when the present economic crisis was still an unseen storm on the horizon, there has been very little in the way of New Year, new card promotions, even from the larger providers. This absence of new deals has been noticed not just by the public but by financial watchers as well. The financial organisation Credit Action agree with the evidence and say that credit in general and low rate credit cards in particular are in short supply. They also found that where credit was available it was often more expensive than before. The pundits all agree " the banks are tightening their belts and their credit criteria.
However, the popularity of credit cards has not diminished and consumers are still on the lookout for a bargain. Chris Tapp, director of Credit Action says that credit cards are a very normalised part of the way people manage and borrow money, which means that its going to be very difficult to persuade consumers to stop using plastic. Add to this the fact that, although High Street sales may be crashing, online purchasing is on the increase with Ebay and other online auction sites seeing a continuing flurry of activity as customers hunt for bargains. All of these transactions (unless you have a PayPal account) are done on credit and debit cards. So the prospect of the British public turning their backs on their credit cards any time soon looks remote.
Leaving aside the question of 0% balance transfers and focusing purely on purchase rates, there are still some cards that give new customers a 0% grace period for a limited period. Once these 0% offers end though, the APR charged on some cards can sky-rocket, prompting an unseemly scramble by many consumers to start card jumping in the hunt for a 0% balance transfer deal. Frequent card jumping is a quick way to send your credit rating nose-diving " these days the lenders prefer customer loyalty to those who are good at playing the system. In the coming months we may start to see a battle between the leading card providers to keep their customer base stable, rather than going overboard to attract new customers, and that can be backed up by the noticeable lack of product promotion in January.
Rather than joining in the scramble for the 0% offers that are still out there, credit card customers would be better advised to accept that the market has changed and that credit card interest payments are inevitable. Consequently the best thing to do is to look for long-term, low APR rates and cards that dont have too many hidden extras in the form of insurance charges, late payment fees and other handling fees. The days of free and easy lending finished in 2008 and everyone has to adjust their expectations to accommodate a much more bearish market, with caution being the watchword. If businesses have to adjust their parameters then so do consumers.
The Internet has its part to play in the brave new credit card world, and online comparison sites are coming into their own. They give the smart consumer a chance to make an informed decision before they leap blindly into the offer that seems to promise the most financial bling but may have a hidden sting in its tail once the honeymoon period is over. Credit card companies are realizing that there is a groundshift in the marketplace and that, despite the dire financial warnings issued almost daily, the consumer is very much in charge this time around. There are still low rate credit cards to be had, but it all has to be part of a much more symbiotic relationship between customers and credit card companies.
About the Author:
Financial writer John Braveman writes posts for various financial and finance industry related websites. After many years experience working in the finance sector he is well versed in the 'dark arts' of credit card finance. You can read more about low interest rate credit cards here.
Posts
No comments:
Post a Comment