The gloomy financial forecast for 2009 shows no sign of improving, if reports in the media are to be believed. Financial institutions are decidedly nervous going into the New Year. The latest Bank of England interest rate cut to the lowest in its 315 year history seems to have had little effect on calming monetary nerves and all reports indicate that the sun has finally set on the era of easy credit. However, consumers still want credit, and they want it at a good rate " preferably 0% for at least the first few months. Credit card companies are worried about exposing themselves to further potential bad debt, so are there still low rate cards available to those with the credit rating and the desire to keep spending on plastic?
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.
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 illusive 0% deals, 2009 credit card customers would be better placed to accept that, along with death and taxes, credit card interest payments are inevitable and look for the best deals they can find. This includes not only the APR of the card, but any additional fees that a customer may incur such as insurance, handling fees, late payment charges and other hidden extras. The consumer has to realize that the days of free and easy lending are over and has to adjust their expectations accordingly. After all; if businesses have to bend to the financial wind, so do consumers.
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 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.
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 illusive 0% deals, 2009 credit card customers would be better placed to accept that, along with death and taxes, credit card interest payments are inevitable and look for the best deals they can find. This includes not only the APR of the card, but any additional fees that a customer may incur such as insurance, handling fees, late payment charges and other hidden extras. The consumer has to realize that the days of free and easy lending are over and has to adjust their expectations accordingly. After all; if businesses have to bend to the financial wind, so do consumers.
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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