Credit Card Companies have had a rocky road since the turn of the Century. In the early years they aggressively marketed their products trying to recruit as many clients as possible with offers of 0% balance transfers. Many responded positively to such promotions and collected multiple cards because after all the economy was booming and there was no apparent reason for that to change. It did of course. The Collateralized Debt Obligation (CDO) crisis that precipitated the recession left many people in trouble. Credit Card Companies found that many people defaulted and a great deal of debt had to be written off because often there was no way to collect it. Their credit checking policies had been lax to say the least.
Obviously these companies are all still in business and their continued success is dependent upon having plenty of customers. It is manifesting itself in plenty of offers being advertised to increase the number of users for each card. Reward offers are seem to be at an all-time high.
New applicants are being offered a substantial number of points for just signing up and spending a specified amount over a few months. Neither the period nor the amount involved can really ever been seen as negative.
There are several consumers being targeted by the card companies and two sections of society that are fairly diverse are among them:
- Those who have poor credit or no real history that can get secured cards and will receive those rewards, even in cash, cashback on dining or gas, even groceries. It is an excellent way to rebuild credit by using the card responsibly.
- The affluent members of society that can be expected to benefit by extensive use of a card.
There is more competition in the market place that card companies need to combat, businesses such as PayPal who just require a single card as the default choice.
Companies are keen that existing customers retain their cards as well of course. What you should certainly do is to make sure you are not losing out by using your current card by looking on competitive websites to see what is happening in the market.
Relaxed but foolhardy?
The environment in the USA appears to be fairly relaxed when it comes to the use of credit cards. The level of debt on credit cards suggests that the recession is a distant memory. The worrying figure is the one that suggests that the average credit card debt of those carrying forward balances month after month is in excess of $15,000. That adds up to a considerable amount of interest that is being paid and that is precisely why card companies are keen to get an ever increasing share of that money.
Credit cards clearly provide convenience and in some areas such as travel they are almost essential. The easiest way to arrange flights and accommodation is to buy online and provide card details to pay. Cards are effectively ID when it comes to things like auto rental. How cards are used is the real question. It is clearly tempting to buy something you want immediately even if you cannot afford it. That little piece of plastic is all that you need. Sadly the feel good factor that purchase provides is superficial and short lasting. The consequences come when the statement comes in and you cannot afford to pay the bill in full. The real cost of the purchase is the initial price together with the interest you will be charged until you have paid for it in full.
Perhaps a word of advice is needed here? By all means use a card for convenience and essentials but you must be able to pay the full statement amount when it is due. If you have a balance and you are merely paying the minimum amount each month then that balance will only fall slightly and that presupposes you do not use the card currently. You should get a consolidation loan at a competitive rate of interest to settle the bill in full. If you have regular income then you should be approved as long as your application is for an amount that appears to be affordable. It is great news that card companies are offering incentives for you to sign up. Do so as long as you can discipline yourself to use the card properly.