Consumers might not be feeling much relief when it comes to interest rates, but the industry is stepping up its offers to grab new customers. New credit card offers are more likely to have longer interest-free periods in which purchases or transferred balances incur no finance charges.
Since the start of 2012, the average interest-free period for a new credit card rose to 10 months, up from seven in 2011. The rise in interest-free periods is attributed mostly to low interest rates for credit card companies and a renewed interest among issuers to step up perks for high-credit customers.
Grabbing Promotional Offers
Promotional offers are best for people who have an above-average FICO credit scores. Consumers with a 720 or better qualify for most offers, while those with a 750 credit score will qualify for almost every credit card with a low introductory interest rate.
There are two different types of low or zero-interest credit card offers:
Promotional purchase interest - A promotional purchase interest period gives the customer a lower interest rate on all purchases made within the promotional period. With an average promotional period of 10 months, a typical credit card user could save as much as 15-20% by making a major purchase on a new, zero-interest card.
Balance transfers - Zero interest balance transfer offers allow consumers to move balances to save on interest. During the promotional period, rates are held low - often at zero percent - before the rates pick up to standard interest rates of 15% or more per year.
Making use of promotional offers is popular online, where customers can compare card offers and select from hundreds of credit card offers. Low interest credit card offers make it easier for borrowers to pay down debt with lower annual interest rates.