Credit Cards Are Making A Come Back Along With Credit Card Debt

By Adriana Barnes on January 12, 2011, 11:10 am

During the recession, credit card companies had to have stricter rules in place for who they would approve for a credit card due to the mounting credit card debt. That has now ended and credit card offers are on the rise again. Mailings with offers are up to 2.7 billion, double from a year ago. That’s after they hit a 16 year low in 2009.

Those with strong credit can expect to get plenty of credit card offers, as many mailboxes start filling up with them.

There are new rates and regulations in place now too. Late fees are capped at $25, your interest will not be raised without some warning, and if you look carefully at your statements they lay out exactly what it will cost you to pay off your credit card debt over time.

Even though the credit card offers are ramping back up, not everybody will be eligible. Companies are focusing on big spenders with great credit.

Incentives to switch are becoming more common and the offers are generous as well. For balance transfers you can get a zero percent interest for a period of time.

Rewards are also becoming generous if you can keep up. With cash back rewards and point rewards you will need to choose a credit card that best fits your spending. Every bank offers more than one credit card option, once you choose, you need to see if your bank is offering the best rewards. Although time consuming, consumers can save some money.

One thing to keep in mind is that rewards are not free. Watch for higher annual fees as the banks pass the cost back on to you.

Rates for those that carry a balance will be higher. It used to be that after a certain period, credit card companies would drastically raise the rate without warning. Now with the new regulations in place they are not allowed to do that, so instead they are starting with high rates on credit card debt.

The average credit card rate a few weeks ago was 14.4 percent. The same time last year it was at 11.8 percent and two years ago it was down to 10.8 percent.

Using a credit card is getting easier and easier too. Companies have been testing a contactless credit card payment system in New York City for the past month. This involves having a chip in your smart phone. The customer then waves the phone over the scanner and the payment is made.

 

Citi is working on a credit card that allows you to pay for products using your rewards. The card will feature two buttons on the front. One allows for normal purchases and charges and the other pays the merchant using rewards or cash back.