We’ve been told it’s coming and now, courtesy of a recovering economy, it looks as though credit card companies are offering intro 0% rates again. The credit card market as a whole has stabilized to a more comfortable position and the credit card companies and banks are reacting. Not only that, but there’s been an uptick in rewards and bonuses, as well.
Interest rates, generally speaking, are steady – which, as we know, is about the only thing thing that is stable at the time – and unless you’re considered average in terms of your credit rating, you’ve not seen any increases at all. For those with average or below average credit scores, odds are, you’ve seen, on average about a 3% increase in the interest you’re paying.
Banks Compete With Intro 0% Rates
Of course, there’s the whole competition factor. There are more banks and card networks pining for our business and that’s fueling some of the sweetened intro 0% rates offers and sign up bonuses. Indeed, it’s a good time to be in the market for a new credit card. For those with excellent credit, the average APR hovers around 12.8 percent and that’s down 1.7 percent from late last year. Better perks, better interest and bigger selection? What more could we, as consumers, want?
The only thing many seem to disagree on is the employment contribution. Many say unemployment rates have “stabilized”. Others aren’t as convinced, and that makes sense. It’s already been cited the reason for the miniscule drop in unemployment isn’t due to new jobs, but in fact, can be explained by the number of Americans who’ve simply given up and dropped out of the job hunt. That could become very problematic in the coming months. The last thing consumers need is some false sense of security. There’s no way to sugarcoat the employment numbers – or rather, the unemployment numbers.
What is apparent, though, is the delinquency rates, which are dropping. That too is lending towards a more generous credit market. Issuers are responding, but the fact is, the lenders far prefer those with excellent credit and, as we know, there are fewer American consumers who have those strong credit ratings. The recession tends to affect credit ratings – and it’s going to take time for that aspect of the economy to recover.
Extended Intro Rates
For now, though, the average intro 0% rate for balance transfers now remains in effect for 10.29 months, which is an impressive 2.39% longer than in the fourth quarter of 2012. Those new purchases that qualify for the 0% APR is averaging 10.13 months, a full 2.5% longer than in the same time period. The average cash back rewards for initial purchases have increased more than 15% and are now close to 34% more “valuable” than they were this time last year.
So are there any warnings? Apparently so. According to the General Accounting Office, ATM fees are on the rise. Fees are up by more than $1.75 (on average) over the past five years. In the past year alone, the increase was a whopping $2.10. If that doesn’t seem like a lot, consider this is for every transaction. Think back to how many times you’ve pulled cash from an ATM over the past year – it adds up quickly. Worse, the GAO says those fees are expected to increase even further before the year’s up.
The GAO estimates that in 2012, the ATM fees charged by financial institutions across the country ranged from $0.45 to $5.00, according to its report released last week. Ah – but there is one consistent feature. The report says that the foreign fee for using an ATM outside your bank’s network “generally stayed constant” from 2007 to 2012. That’s important because it could be the numbers are closing in on in and out of network fees, making it irrelevant as to whether you seek out one of your bank’s ATMs or one that’s outside the network. You have to be careful, though, because when you’re out of a network, you not only have the other bank’s fees, but odds are, your bank may penalize you as well.
Foreign Transaction Fees
For those who travel outside the country, you’ll be happy to know that in 2012, large financial institutions had an estimated average foreign fee of $1.62, which is $0.26 more than the estimated average foreign fee charged by small financial institutions, which comes in at $1.36. That could also be attributed to the rise costs of actually running ATMs, says the GAO. Most banks surveyed say that the costs associated with operating ATM s have increased over the past five years, while per-ATM revenues have been on the declined.
Many of the operators GAO contacted believe that ATM operation costs will continue to rise in the future and that revenues will be flat or decline,
the GAO report said. The survey results show that 18 out of 25 financial institution operators anticipate ATM costs will increase in the future – possibly this year.
The report says that the main reasons for the increase can be chalked up to investing in the newer and far more enhanced ATM technology. Upgrades are important for banks and there are new compliance laws that play a role, as well.
That might explain why many financial experts discourage consumers from using ATMs with their credit cards. Cash advances are costly as evidenced by the growing costs; taking out cash with your credit card now averages $10.90. Those numbers are rising quickly, as well. Already, they’re up 23.02 percent from 2012 fourth quarter. It’s also indicative of a 22.61 percent from the first quarter of 2012. It’s not known how much experts predict those numbers will rise, but already, they’re extraordinarily high for many consumers.
Does any of this give you reason to consider making changes in your credit cards? Are you more likely to seek out one of these newer credit card offers with extended 0% APR for balances and/or transfers? Share your thoughts with us.