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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