Credit Card Offers Continue to Improve Despite Weak Economy

To be perfectly honest, I don't see how the American economy can continue to expand while there are still some major economic hurdles to overcome:

• Unemployment is still high, and will probably eventually settle at a rate much higher than Americans are used to. It's a whole new economy, no doubt. Anyone waiting for the jobless rate to drop below 6% is an anachronism. Tomorrow's July employment report from the Labor Department: expect ugliness.
  
  
• Banks and corporations are hoarding billions in cash. Result: banks aren't lending the way they're supposed to, and companies aren't hiring like they used to. Banks are still collapsing at an alarming rate, while businesses of all sizes have been enjoying significant productivity gains since cutting back on labor during the Great Recession; they don't want to give those gains up.
  
  
• Home prices aren't improving in any meaningful way. Moreover, the residential foreclosure crisis is still going strong.
  
  
• The national debt is unimaginably high, and there is no political will to bring it down while the jobless rate is painfully elevated.
  
  
• The very real threat of deflation likely means that a return to sustainable growth and prosperity are years away.
  
  
• Distressed commercial real estate (commercial properties that are delinquent, in default, in bankruptcy, in foreclosure or are bank-owned) are rising fast.
  

Double-dip recession? I certainly don't want to see it happen, but I know it could easily become a reality. Here's what former Labor Secretary Elaine Chao had to say about it in a recent TV interview:





Yet, despite the dismal economic climate, credit card offers continue to improve.

Discover recently came out with the Black card, which has the best 0% Intro APR on both transferred balances and new purchases of all Discover cards, and also has the best cashback rewards program. We've always liked Discover's cashback program because it's easy to use and it's one of the most generous cashback programs in the American consumer credit card market.

Just as appealing as the Black Card, Discover has another new card: the Discover More Card with a $75 cashback bonus. This card is great because it offers the same 12 month interest-free period on transferred balances as the Black Card, but also adds a bonus $75 on top of it's already generous rewards program. In order to qualify for the $75 bonus, cardholders have to make $500-worth of new purchases within 3 months. Not hard, really.

Chase is also coming out with new, attractive offers. Chase has the standard Freedom Card, which is a great rewards credit card, but it also has 2 special variants of Freedom: Freedom with a $100 cashback bonus and Freedom with a $50 cashback bonus:

• With the Freedom $100 cashback bonus card, the cardholder must spend $799 on new purcahses with the card in order to qualify for the bonus. Not as easy as the Discover cashback bonus card, but, then again, the bonus is $25 higher with this Chase card.
  
  
• With the Freedom $50 cashback bonus card, the bonus is easy to earn. You get $50 after making one purchase with the card. Sweet.
  

There's also the new Chase Slate credit card, which offers 0% intro APR on new purchases and transferred balance for 12 months (Elite pricing, i.e. reserved for those with excellent credit.)

0% intro APR, no fee balance transfer credit cards are alive and well in the UK. When they'll return to the American market is anybody's guess. Hopefully soon. Thanks for reading.

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IBERIABANK Visa Select: Now 0% Intro APR for 12 Months

IBERIABANK (yes, the official name is in all caps!) has reconfigured the terms and conditions of their credit cards. After scrutinizing what's new with these cards, it's clear that the most notable change is with the IBERIABANK Visa Select credit card. It's now offering a 0% intro APR rate for 12 months on new purchases, with an ongoing or "goto" rate of 7.5% (Prime + 4.25%.) Very impressive; very competitive. The balance transfer deal associated with the Visa Select card is 1.99% on transferred balances for 12 months, with a balance transfer fee of 3%.

Before applying for any IBERIABANK card, be aware that you must:

• have excellent credit, with no delinquencies, bankruptcies, collection action, etc,
  
  
• have been working with your current employer for at least 6 months,
  
  
• be willing to provide proof of your income,
  
  
• be willing to wait up to 30 days for a yea or nay from the bank, as this particular credit card bank processes applications the old fashioned way (humans, not computer algorithms.)

If you can deal with all of the above, click here to apply.

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Slate: A New 0% Credit Card from Chase

The government continues to report positive macroeconomic news. Yesterday, the Institute for Supply Management (ISM) released its Purchasing Manager's Index (PMI) for October 2009. The PMI came in at 55.7%, better than what Wall Street economists were expecting, and better than the September figure. For the PMI, any figure above 50% is a strong indication that the American manufacturing sector is expanding.

Though an economic recovery appears to be taking hold, too many Americans are still dealing with various forms of oppressive debt, a home mortgage balance that's higher than their home's value, and job insecurity. In fact, earlier today Johnson & Johnson, a component of the Dow Jones Industrial Average (DJIA) and number 29 on the Fortune 500, announced that the company will be cutting 7,000 jobs (that's between 6% - 7% of its workforce.) National unemployment, already at 9.8%, will almost certainly rise during the fourth quarter and into Q1 2010. A jobless economic recovery? Yes: we're in it right now.

The whole world is relieved that the subprime debt-inspired credit crisis, which precipitated the worst recession since the early 1980's, and which brought the American financial system to its knees, has almost run its course. The liquidity maelstrom of 2008 and 2009 prompted the banks which survived the subprime debacle to cutback on all kinds of loans, including credit cards.

But financial markets are on the mend, as evidenced by low LIBOR rates, a healthy TED spread and the return of generous 0% intro APR credit cards.

Credit cards that offer a 0% intro APR period of at least 12 months all but disappeared from the market last year. But they're back. JPMorgan Chase Bank, commonly known simply as Chase, recently revealed a new credit card called Slate. Here are the vitals on Slate:

• 0% introductory APR on purchases for 12 billing cycles
  
  
• 0% introductory APR on transferred balances for 12 billing cycles
  
  
• Balance transfer fee of 3% of each transaction, with a minimum of $5
  
  
• NB: The 0% intro APR is reserved for those who qualify for "Elite" or "Premium" pricing. Those who can only qualify for "Standard" pricing cannot take advantage of any interest-free introductory period with this particular card.
  
  
• For those who qualify for Elite pricing, the "goto" rate (also known as the ongoing rate) is 13.24% (the U.S. Prime Rate plus 9.99%); for Premium pricing it's 17.24% (Prime plus 13.99%.) For Standard pricing, the introductory and goto rate is 22.24% (Prime plus 18.99%.)
  

If you have a good FICO® credit score (above 700), you will probably qualify for either Elite or Premium pricing.

Slate is a very timely credit card: it has arrived in time for the fast approaching Christmas shopping season. With Slate, cardholders can do their holiday shopping and have plenty of time (12 billing cycles) to pay their credit card balance down to zero without having to worry about interest charges.

The goto rate with the Slate card, however, is relatively high when compared to consumer-friendly credit card offers that were available before the global credit crisis (likely a direct result of new rules included in the Credit Card Act of 2009.) For the consummate borrower who qualifies for Elite pricing, the rate charged on any balance remaining after the interest-free, introductory period ends is Prime (currently 3.25%) plus 9.99%, which translates to 13.24%.

But the U.S. Prime Rate is as low as it can possibly go. As the economy heats up, it will certainly rises, and it will likely do so at a relatively fast clip as the Fed works to contain future inflation. There is no way of knowing exactly how high the Prime Rate will be a year from now, but if we plug in the median U.S. Prime Rate -- 8.75% -- then we get a rate of 18.74%, which anyone would agree is not consumer-friendly. In fact, any rate above 15% would be too much of a financial burden for the typical credit card consumer.

That's why we recommend Slate for anyone who can pay their balance down to zero over 12 months or so, which shouldn't be that hard to do (no need to go crazy with the Christmas shopping!)

As always, your comments are welcome and appreciated.

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Will 0% Credit Cards Make a Comeback?

No one can predict the future, but if our economic recovery continues on its current course, we most likely can expect 0% credit card deals to stage a comeback.

The Past
When our economy hit its low point in 2008, zero percent offers for balance transfers virtually disappeared from the market. Just months before that, there were a plethora of interest-free offers available, many of them being for 12 to 15 months. As our country’s financial health deteriorated, almost every bank terminated these incredible offers. Instead, they were replaced with promotional rates only valid for three to six months.

The Future
Today, we are seeing positive signs that this trend is now reversing. During the third quarter of this year, issuers like Discover gradually began to sweeten their promotional offers. More and more credit card deals for longer promotional periods have been popping up across the net. Unfortunately some issuers, like American Express and Bank of America, have been slower to follow suit.

Assuming we continue on the road to recovery, these incentives should continue to become more common. Initially, they will probably only be made available to those with average to above-average credit. Once unemployment and foreclosures begin to ease up, banks may extend these offers to those with below-average credit, too.

As the percentage of bad debt goes down, lower interest rates on credit cards should follow. However, it’s important to note that most have APRs which are now linked to the prime rate; if that were to increase significantly, then rates may go up.

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Pulaski Bank and IberiaBank Credit Cards: Great Products, But We Can't Recommend Them Anymore

We are no longer recommending IberiaBank or Pulaski Bank credit cards. Here's why:

• The two Pulaski Bank no fee balance transfer 0% credit cards that we were recommending on the www.BalanceTransfer.cc website are no longer available. The Pulaski Bank & Trust Company owns IberiaBank, so I'm guessing that the company decided to focus on the IberiaBank brand. The recently discontinued Pulaski Bank cards were very similar to IberiaBank cards.
  
  
• The three IberiaBank cards, which were the only 0% intro APR, no fee balance transfer credit cards we were recommending, are still available, but the terms and conditions associated with these cards were recently changed. All 3 cards now charge a 2% fee on balance transfers, and, for all 3 cards, the "goto" APR's were raised (the "goto" rate is the APR your balance would be subject to once the introductory period ends.) And that's not all: the introductory APR for all 3 cards was raised from 0% to 1.99%.
  
  
• For the three IberiaBank cards we were recommending, we referred hundreds of applications, and, as of today, all those applications resulted in zero approvals (for June.) The IberiaBank Visa Classic cards, which required a "good-to-excellent" credit rating, is now a card which requires an "excellent" credit rating. In fact, now all IberiaBank cards require an excellent credit rating. For us, this is clear evidence that these cards are not worth recommending, since the vast majority of applicants would have to face a declined application.
  
  To be clear, this is not to say that IberiaBank is not a good credit card bank. In fact, we applaud the bank's tight lending standards and non-automated review process. However, we feel that the bank's standards are a bit too tight, plain and simple. That's just our opinion. If you are interested in applying for an IberiaBank card, please feel free to follow this link.
  

Our no fee balance transfer page still contains two American Express cards, but these cards don't offer 0% intro APR. The intro APR for the Amex TrueEarnings® Credit Card from Costco is 1.99%, and this rate lasts for six months. For the Amex Starwood Preferred Guest® card, the intro APR period is also 6 months, but the intro APR is 2.9%. Of course, we have absolutely no problem recommending American Express products, since the company's customers have ranked Amex above its competitors two years in a row. O% intro APR is nice, but so is dealing with a bank that won't treat you like a sucker.

Stay tuned for the latest updates.

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