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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Discover Releases A Biodegradable Version of The Discover More Card

While campaigning for the White House, Senator Barack Obama promised America that he would create 5 million "green jobs" over the next ten years. Following through, President Obama tagged $60 billion of stimulus cash for investment in clean energy and technologies. For some perspective: the Obama administration has committed more money to foster America's green economy than the gross domestic product of Luxembourg.

Complaints about all the planned green spending have been few.

It's clear that green movement is no passing fad, so many companies are trying to figure out how to capitalize on America's burgeoning love for and commitment to all things green. Discover Financial Services' (DFS) answer: a new version of the popular Discover More card that's biodegradable.

The Biodegradable Discover More Card is made from a special PVC plastic that's designed to safely breakdown when exposed to conditions similar to those found in landfills.

Card features and benefits include:

• 0% introductory APR on new purchases and balance transfers for 6 months.
  
  
• After the introductory honeymoon is over, the new purchases APR is 10.99% - 18.99%, depending on the cardholder's credit quality. For transferred balances, the "goto" rate is 10.99%.
  
  
• 5% Cashback Bonus® in categories like travel, home improvement stores, department stores, gas, restaurants, pet stores and many more
  
  
• Up to 1% unlimited Cashback Bonus® on all other purchases
  
  
• 5% to 20% Cashback Bonus® through our exclusive online shopping site
  
  
• No annual fee
  

For each transferred balance, the fee is 3%, with no minimum and no maximum.

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No Fee Balance Transfer 0% Credit Card from Iberiabank

Considering that banks can borrow at close to zero percent, consumer and business loan products aren't very consumer-friendly. Thankfully, certain smaller banks are still offering great credit deals, like Iberiabank's Visa Classic and Gold cards.

Since the height of the global credit crunch during the third quarter of 2008, the federal government has been doing all it can to get banks to lend money to both consumers and businesses. Despite the fact that large, American bank holding companies (BHC's) have been sitting on massive piles of cash for some months, and despite being prodded by politicians to get credit flowing through the economy, many Americans are finding it difficult to find business and student loans, credit cards and other loan products at reasonable rates. Banks are able to borrow at rates below 0.25%, but they aren't passing these favorable rates onto credit-starved individuals and organizations. Thankfully, there are some consumer-friendly credit products on offer from a limited number of top-quality, U.S.-based financial institutions, like Iberiabank. Of all the 0% credit cards available in the current, credit-crunch and recessionary lending environment, the Iberiabank Classic Visa® credit card is the best, featuring a new purchases rate of Prime plus 3%, no annual fee and zero percent introductory APR on transferred balances with no balance transfer fee.

The Federal Reserve has been buying U.S. Treasury securities in an effort to lower the return on government bills, notes and bonds. Lower yields makes these securities less attractive to institutional and individual investors, which, in turn, should cause capital to shift from the safety of government debt to riskier investments like stocks and corporate bonds. This strategy has another very significant advantage: buying long-term Treasuries will keep mortgage rates low. We know that at least one prong of the Fed's plan has worked, as many well qualified consumers are now able to get new mortgages -- or refinance their current home loans -- at rates below 5%. But the spread between the Fed's short-term rates and the rates on short-term credit products like credit cards is still relatively high. That's because:

• the secondary market for credit card receivables completely dried up last year, and
  
  
• many banks are still trying to make up for losses related to the unnumbered subprime loans and failed derivative investments made during the recent housing/credit boom, and
  
  
• banks are concerned about the rising rate of delinquencies and defaults as the current recession continues to stoke the unemployment rate higher.
  

At the end of 2008, the Fed created the Term Asset-Backed Securities Loan Facility (TALF), a program that will lend up to $1 trillion to jumpstart the secondary market for all types of receivables back to life. But TALF will take time to work. Until then, big banks will have to keep credit card receivables on their own balance sheets, and credit card interest rates from these banks will remain mediocre at best and unfavorable at worst.

How Is Iberiabank Able to Offer Such A Great Free Balance Transfer Credit Card?

A good question, and the answer is quite simple: because this particular bank has always had high lending standards, even when other, much larger banks were making loans to just about anybody who wanted one. Consumer who don't mind giving up the convenience of an instant approval and who are willing to provide at least some proof of their income can enjoy great features like:

• No fees on introductory balance transfers
  
  
• Zero percent introductory APR on transferred balances for six months
  
  
• No annual fee
  
  
• Interest rates as low as Prime plus 3 percentage points
  

The highly recommended Iberiabank Visa Classic credit card offers the best rates, but the card doesn't have a rewards program. The Iberiabank Visa Gold card has slightly higher rates associated with it (qualified applicants can enjoy Prime plus 4 percentage points), but the tradeoff is that it comes with a decent cash-back rewards program. Prime plus four percent is still an excellent rate is today's credit environment.

Then there's the Iberiabank Visa Platinum card, which also has a top-tier interest rate of Prime plus 4 points. Like it's Classic and Gold cousins, the Platinum card is a great free balance transfer credit card. Platinum offer benefits like travel accident insurance and a unique Scorecard® Bonus Point rewards program. So, why would we recommend the Classic and Gold cards before recommending Platinum? Here are the reasons:

• The Platinum card requires applicants to have a spotless (excellent) credit rating, which means, in all likelihood, most applications will end up in the declined pile.
  
  
• The Gold card has a cash back rewards program, which we feel is the best type of credit card bonus, and the credit requirement for the Gold card is good-to-excellent, which translates to fewer applicants having to deal with a rejection.
  
  
• The Classic card has the best interest rates for those who don't care about rewards. With Classic, even the cash advance rate is the best we've ever seen at Prime plus 7 points. How many cards exist in the American market where you can get a cash advance at 10.25%? Most cards charge at least 25% for the cash advance privilege. Using a credit card to get a cash advance is almost never a good idea, but for anyone who might have to use one in an emergency, it's good to know that this card won't abuse the cardholder with exploitative rates.
  

Over time, TALF will help restore the secondary receivables market, which in turn will help to drive down rates associated with both consumer and business loan products. Business credit cards, which have all but disappeared from the U.S. market, will likely make a comeback within the next few quarters. Until then, American consumers who got used to cheap, easy and convenient loans products from the largest American BHC's should look to often ignored and soundly managed smaller banks, and their local credit unions, for consumer-friendly loans and credit cards.

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