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 television adverts offering 0% deals on credit cards has been considerably less than last year. Compared to 2008, when the thought of a recession was far from the average consumers mind, there has been very little in the way of credit card offers of any kind. This absence has been noted by the organisation Credit Action, who have found that credit in general and low rate credit cards in particular are much rarer than at the same time last year. They also found that where credit was available it was more expensive than before, with 0% offers being harder to find. The findings suggest that banks and credit lenders are reducing their market exposure and are now waiting to see what 2009 brings before opening up the market again to card-hungry consumers.
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.
There are still bargains to be had, despite all the gloom and doom. 0% balance transfer cards are still relatively plentiful and special offers on purchases are quite common as well. The 0% grace periods on purchases tend to be much shorter than those for balance transfers and once these special offers end the APR can climb rapidly. This can prompt an unseemly scramble as customers desert their cards in search of a 0% balance transfer to save money. However, frequent card-jumping can quickly damage your credit rating and reduce the chances of further credit. This year, cards are looking for customer loyalty and are changing their tact accordingly. In the coming months we may start to see a groundshift in policy amongst card providers, where cards incur interest charges earlier, but those charges are kept lower to keep customers from seeking solace in a quick-fix 0% temptation.
Rather than chasing after 0% shadows, credit card customers may be wiser to take a more pragmatic approach to this changing marketplace. To paraphrase the quotation, there are now three things certain in life " death, taxes and interest charges. Credit card customers may find that cards that do charge an APR are easier to access than the 0% offers, as the lenders know they will start to make money from the customer from the beginning of the financial relationship. The best thing customers can do is to look for a relatively low APR rate that doesnt contain any hidden extras such as compulsory insurance payments, handling fees or overpriced late payment fees. Consumers, like businesses, have to adjust their expectations to take into account the overall change in the financial markets.
The Internet has been of huge benefit to consumers in the brave new credit card world and online comparison sites have given the customer a control over the market that they never had before. They offer the smart consumer the chance to make an informed decision before choosing to apply for certain credit cards that may offer an enticing introductory package but have a nasty sting in the tail once the grace period is over. Credit card companies realise that the consumer is far more powerful than before as knowledge is power and the Internet provides that knowledge to a much more clued-in customer. There are still some excellent, low rate credit card deals to be had, but the market is now a much more symbiotic merging of credit lenders and customers.
The number of television adverts offering 0% deals on credit cards has been considerably less than last year. Compared to 2008, when the thought of a recession was far from the average consumers mind, there has been very little in the way of credit card offers of any kind. This absence has been noted by the organisation Credit Action, who have found that credit in general and low rate credit cards in particular are much rarer than at the same time last year. They also found that where credit was available it was more expensive than before, with 0% offers being harder to find. The findings suggest that banks and credit lenders are reducing their market exposure and are now waiting to see what 2009 brings before opening up the market again to card-hungry consumers.
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.
There are still bargains to be had, despite all the gloom and doom. 0% balance transfer cards are still relatively plentiful and special offers on purchases are quite common as well. The 0% grace periods on purchases tend to be much shorter than those for balance transfers and once these special offers end the APR can climb rapidly. This can prompt an unseemly scramble as customers desert their cards in search of a 0% balance transfer to save money. However, frequent card-jumping can quickly damage your credit rating and reduce the chances of further credit. This year, cards are looking for customer loyalty and are changing their tact accordingly. In the coming months we may start to see a groundshift in policy amongst card providers, where cards incur interest charges earlier, but those charges are kept lower to keep customers from seeking solace in a quick-fix 0% temptation.
Rather than chasing after 0% shadows, credit card customers may be wiser to take a more pragmatic approach to this changing marketplace. To paraphrase the quotation, there are now three things certain in life " death, taxes and interest charges. Credit card customers may find that cards that do charge an APR are easier to access than the 0% offers, as the lenders know they will start to make money from the customer from the beginning of the financial relationship. The best thing customers can do is to look for a relatively low APR rate that doesnt contain any hidden extras such as compulsory insurance payments, handling fees or overpriced late payment fees. Consumers, like businesses, have to adjust their expectations to take into account the overall change in the financial markets.
The Internet has been of huge benefit to consumers in the brave new credit card world and online comparison sites have given the customer a control over the market that they never had before. They offer the smart consumer the chance to make an informed decision before choosing to apply for certain credit cards that may offer an enticing introductory package but have a nasty sting in the tail once the grace period is over. Credit card companies realise that the consumer is far more powerful than before as knowledge is power and the Internet provides that knowledge to a much more clued-in customer. There are still some excellent, low rate credit card deals to be had, but the market is now a much more symbiotic merging of credit lenders and customers.
About the Author:
John Braveman has many years of experience working in the financial sector. He writes for various websites and uses his experience to help present a clear view of the financial market. You can read more about low interest rate credit cards here.
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