Posted on May - 22 - 2011
Credit Card Offer Quality Has Nowhere to Go But Down
Since last fall, credit card companies have been upping the ante to lure in new customers. Beginning in September, 0% introductory rates began climbing from six to twelve to eighteen months. The longest offer, a 0% APR for 24 months on balance transfers, was available from December until the end of April. Today, the Citi Platinum MasterCard offers a 0% APR for 21 months on purchases and balance transfers, not quite 24 months, but still about as generous as these offers have ever been.
Credit card companies that weren’t competing with low introductory rates began offering up lucrative sign up bonuses. In November, Chase and Discover began offering $50 cash back bonuses. These quickly increased to $100 bonuses and a few days ago, Chase upped the ante to $250 on its no annual fee Chase Sapphire Card and a monstrous $625 on its Sapphire Preferred Card.
Unfortunately, the escalating war to get credit cards in consumer wallets is likely to fade out once consumer demand for credit cards begins to pick up. In other words, by the time people start looking for credit cards, the best deals will be long gone. The reason for this is quite simple. During 2009 and early 2010, millions of consumers were hit with rate increases, credit limit cuts and other nefarious changes in terms. Many consumers ditched credit cards, while others took their business to more welcoming companies.
Today, aversion to credit card debt and an improving economy have dwindled the pool of available applicants. This forces credit card companies to play a game of oneupmanship that is great for consumers who happen to be looking for credit cards at this moment. Tomorrow, however, things might change.
A major factor that will set the pace for the length of 0% introductory rates is the Fed. As long as interest rates remain at historical lows, and banks believe they will stay low, above average 0% balance transfer offers will stay on the market. They may not last 21 months, but they’ll still be on the generous side. Unfortunately, when interest rates do rise, 0% credit card offers will surely decline in length. Of course, rising rates will likely increase consumer demand for low rate credit cards, but by that time, all the ultra-long deals will be gone.
The fall of 2011 will likely trigger decreases in generous sign up bonuses as consumer demand picks up ahead of the holidays. Once more consumers start seeking out new credit cards, banks won’t have to essentially bribe people with bucket loads of cash, points, or miles.
Ultimately, the next few months will likely feature the most generous credit card offers in history. Consumers who happen to need a credit card during this period will make out like bandits. Those who don’t will at least have the benefit of not knowing what they missed out on.
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- Apply for a Credit Card & Get $500 aka Credit Card Offers Gone Mad
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- Longest 0% APR Credit Card Offers for Summer 2011
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