Card issuers aim at prime borrowers for 0% apr cards
Ever since the delinquency rates dropped by over 26%, card issuers are having a field day and promoting their 0% offers to prime borrowers. Any individual with a credit score of over 720 is flooded with mail from card companies. Balance transfers have a longer grace period of about 21 months and 0% APR`s on fresh purchases.
Based on a study done by Synovate Mial Monitor, around 71% of the mail from card companies offer low APR`s (introductory offer on new purchases) and increase in balance transfers mail to about 65%.
As recently as last year, individuals with low-zero balances were turned down by card companies as they offered lesser profits to companies because of their frugal ways. Now, the very same companies are hoping that these credit-worthy spenders will continue with the spending as well as carry forward a balance well after the introductory period, says chief executive, CardHub.com Odysseas Papadimitriou.
Some highlights and features:
• The introductory balance transfer offers will last up to 21 months as compared to 12 months in the previous year. Card holders with a credit score of around 720 or more can have an option of 12 balance transfers at 0% interest for a year.
• The balance transfer fees are between 3% and 5% and this is quite high (which in turn reduces a major chunk in savings). Visa Black Card has annual fees of $495 with a balance transfer fee being capped at $50.
• By the end of the promotional period the rates would have averaged to around 15%, which could be very high for prime spenders who were used to being charged around 10%. So, by paying off the whole balance before the end of the promotional period, one can save on the interest rates. If not, one would end up paying much more than the prevailing rate.
As it is a well-known fact that APR`s could be hiked after a formal notification via mail. Although, the new rates will not be applicable to the balance that already exists, it will be applicable to new purchases made after 14 days of the notification.
• Earlier the penalty APR was at 24% for a single payment that was missed. However, with the current 0% credit cards, the card holder gets a long grace period of about 60 days. This would be a very convenient deal for people who tend to forget timely payments and end up paying the penalty APR.