Are Credit Cards Still Competitive?
For practically the last decade we’ve seen the credit card change from something only the rich use to something practically every person in Australia owns. I think the average number of credit cards per person is 2 or 3 and I know it’s commonplace for people to have 5 credit cards in their wallet or purse (not that I suggest that you do!).
In my opinion the internet is responsible for most of the change in attitude, not only to credit cards, but finance in general.
Over 80% of Australians have computer access with Internet, making the ability to hunt for the best deal a lot more desirable. Credit Card Companies are able to list all the cards available to you, so you can make an informed decision.
So, how has this affected credit card and finance industry over the last 10 years? Firstly, there has been an increase in new internet only banks and credit card companies springing up. The traditional high street banks and building societies also created their online brands and products. Many financial products on offer via the internet have additional benefits or lower interest rates because the banks have less overheads and administrational work to do if customers are applying and managing their accounts online, such as organising and signing up for a credit card online.
The internet has fueled the consumer demand for credit cards and loans and certainly the banks have only helped fan the fire by offering attractive 0 per cent and low rate deals or balance transfers in order to attract new customers and increase their market share. More people have built up debts on credit cards and loans than ever before and the total Australian debt mountain now stands at a staggering $100 billion. Debt is also increasing by $1 million every 5 minutes.
You might expect the credit card market to have taken a similar stumble but this isn’t the case so far. Amazingly, amongst all the mortgage misery and reports of house prices falling, credit cards seem to have stood up to these issues. Today there are credit card companies offering 15 month interest free on purchases and balance transfers. The best credit card deals not so long ago were 12 months 0 per cent for purchases and 13 months 0 per cent for balance transfers, but even in the midst of the credit crunch we are seeing better deals on offer every month. People who do struggle with their debt, in turn require Credit Card Consolidations setup, making their debt more manageable.
This is good news for consumers but should not mean that people continue spending on their card without thinking about the consequences; every credit card bill has to be repaid. Credit card companies are continuing to increase their 0 per cent offers because they want new customers, and now looks like a good time to take advantage of these fantastic 0 per cent deals.
The main advantage with a 0 per cent balance transfer period is the peace of mind it can give to customers wanting to keep interest payments at a minimum.
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