From heftier sign-up bonuses to additional cash-back rewards and interest-fee financing, the 11 major credit-card issuers’ latest credit-card offers are more generous than ever before. Matt Schulz, who is a senior industry analyst at Creditcards.com, which covers the credit-card industry, tells Consumers Digest that now is “the best time in the history of the credit-card business” for you to find great introductory deals.
“It’s such a buyer’s market right now,” Schulz says.
Given that credit-card offers have been generous for the past 3 years, we wondered whether any indication exists that a point will come when the deals reach their peak and start to decline. If so, should consumers act now before the offers start to vanish?
Ten experts tell us that consumers should expect the generous offers to continue for the foreseeable future.
“I don’t think we’re living in a golden age that’s going to disappear next month,” says Jason Steele, who writes about the credit-card industry. “We could have this same conversation in 2 or 3 years. This isn’t a market in which people need to decide when to jump in and when to sit out.”
You should keep in mind that you must have a Fair Isaac (FICO) credit score of at least 740 to get the best credit-card offers. (All credit-card issuers use FICO scores, which are calculated by evaluating your credit data and range from 300 to 850.)
If your FICO score is between 700 and 739, you still can take advantage of some of today’s better credit-card offers, but you’ll have to pay a price, such as an annual fee (as low as $19 but as high as $450, depending on the card). You likely also will pay a higher annual percentage rate (APR) than would a consumer who has a score of at least 740, and you won’t be eligible for the credit cards that have the best introductory bonuses.
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If your FICO score is below 700, you won’t qualify for most credit cards. If you qualify for one, you’ll pay an annual fee and an average APR of 22.98 percent for a card that has little in the way of rewards.
Speaking of APRs, at press time, the average APR on credit cards was at an all-time high of 15.59 percent, according to Creditcards.com. Experts tell us that APRs will continue to rise in 2017, because Federal Reserve is expected to raise short-term interest rates twice more in 2017.
All of the 11 major issuers’ credit cards have a variable APR that’s tied to the prime rate, which is tied to The Fed’s short-term interest rate. The Fed raised the short-term rate by 0.25 percent in March 2017, so APRs immediately climbed by 0.25 percent. You probably didn’t get a letter in the mail notifying you that your APR rose, because credit-card issuers aren’t mandated to notify you when a card’s APR increases as a result of The Fed raising interest rates. (Issuers must notify you and give you 60 days’ notice when they decide to raise a credit card’s APR independent of The Fed’s actions.)
A 0.25 percent increase adds $2.50 in interest per year for every $1,000 in debt. That might not sound like a large increase, but if you carry a lot of debt, the interest can add up, says Sean McQuay of Nerdwallet, which is a consumer-finance publication. In other words, as APRs increase, the importance of paying your monthly balance in full also increases.
INTEREST FREE. Experts tell us that as APRs increase, credit cards that have a zero percent introductory APR become more valuable. We found that 56 credit cards (42 percent) now include a zero percent introductory APR that lasts at least 6 months and as long as 21 months, compared with 61 credit cards (39 percent) that had that feature in 2014. Zero percent introductory-APR deals maxed out at 18 months in 2014.