During the past few years, we've all come to take 0% APR credit card offers for granted. Soon, however, we may miss the days when our mailboxes were filled with these credit card offers.
During the better part of this decade, credit card companies were giving away 0% APR introductory rates to lure in new customers. This has been great for consumers, especially those carrying high interest balances. The average household, which carries close to $9,000 in debt, could save over a $1000 a year on interest by taking advantage of 0% APR balance transfers. Similarly, people looking to make large purchases could pocket a few hundred dollars by enjoying as many as 15 months without interest payments.
Unfortunately, the heyday of free money is coming to an end. Recently, many credit card companies have begun reducing the duration of 0% APR credit card offers (for more information, see 0% APR Credit Cards: Here Today, Gone Tomorrow.) And, with profits dwindling, many credit card companies are raising interest rates on their current customers to generate more cash.
In the past, a consumer whose credit limit was cut or interest rate was raised could simply open up their mailbox and find a 0% APR credit card application. And when those offers disappeared, they could turn to the internet and snag a 0% APR for 1 year. Today, finding a 0% credit card on the web is still relatively easy. However, the days of the 0% credit card may be numbered. Here are a few factors that may contribute to the demise of the 0% APR:
1.) Credit card companies don't want your business: Individuals living in Florida, California, and Nevada may have already noticed this, as many credit card companies have cut credit limits and raised interest rates substantially to people in these areas. The rest of us, however, may be next. With credit card defaults rising substantially across the country, there is little incentive for banks to make 0% loans when there's a growing chance they may never get repaid.
2.) Money is expensive: During the real estate bubble, banks had plenty of money to loan and were more than willing to take risks. Since the credit crunch hit, however, banks have substantially raised the qualifications applicants need for credit approval while raising fees, cutting limits, and increasing interest rates. Why? Because they no longer have boatloads of cheap money to lend.
3.) The 0% APR is a recent phenomenon: At the beginning of this decade, there was no such thing as a 0% APR. A good credit card introductory rate was 2.9% for 6 months. The 0% APR credit card, like the subprime mortgage, was a product of the easy credit that is now undermining our economy.
While it may seem alarmist to trumpet the end of the 0% APR while so many offers are available, there are numerous economic factors that point to the demise of these deals. With the credit crunch in full swing and no clear end in sight, consumers carrying high interest balances should act sooner rather than later to refinance with a 0% APR. The same holds true for those who will be making purchases they cannot repay immediately. Credit card interest adds up quickly, and 0% interest rates have helped many people dig their way out of credit card debt. So if you think you could use a 0% credit card, you should strongly consider applying for one while you still can.
To compare 0% APR credit card offers and apply online, visit the credit card comparison section of Credit Card Depot. *Important Disclaimer: See online credit card applications for complete terms and conditions. While reasonable efforts are made to maintain accurate information, all credit card information is presented "as is" and without warranty. When you click an "Apply" button, review the credit card terms and conditions on the issuing company's website.
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