The big news in the credit-card world is the comeback of credit card offers. Many banks are offering lower-interest-rate offers again. Also, credit line increases are back for borrowers with the highest credit, as are cash advance checks.
What has changed since 2009? Simply put, banks need to hold on to their best customers – especially as more consumers switch from using credit to using debit or cash.
As you may remember, not too long ago, credit-card companies were cancelling' cards, lowering credit limits, and increasing interest rates. Now standards are being dropped again. Regardless, responsible individuals should keep the debit card/cash strategy and stay away from piling debt again.
Think of these offers and the catch attached:
- Low promotional rates -Once the promotional rate expires, the remainder of the balance gets charged a usually very high APR.
- Balance transfer checks - Balance transfer fees are in the 3% - 4% range and may not have a cap. And if the entire balance isn't paid off during the promotional period, the cardholder pays interest of 15% to 20%!
- Cash advances - Very imprudent to take these! Interest rates run an average of 25%, as well as an average 3% to 4% fee just to get an advance
- Credit Line Increase - A higher credit limit is fine if you don't pile up more debt. Also if the issuer pulls your credit history, your credit score could drop before it goes up.
In short, don't get trapped again with seemingly enticing credit card offers. Stay on your path to financial fitness!
Ritu Mehta, Editor
ACE Cash Express Money Management Tips