{"id":8770,"date":"2009-10-09T20:00:52","date_gmt":"2009-10-10T00:00:52","guid":{"rendered":"\/\/www.askmrcreditcard.com\/news\/?p=8770"},"modified":"2009-10-09T20:00:52","modified_gmt":"2009-10-10T00:00:52","slug":"credit-card-debt-down-bye-bye-0-intro-aprs","status":"publish","type":"post","link":"https:\/\/www.askmrcreditcard.com\/news\/credit-card-debt-down-bye-bye-0-intro-aprs\/","title":{"rendered":"Credit Card Debt Down; Bye Bye 0% Intro APRs"},"content":{"rendered":"<p>Shocking news today as Americans are actually reducing their credit card debt.\u00a0\u00a0\u00a0\u00a0 According to t<a href=\"http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2009\/10\/07\/AR2009100703680.html?hpid=sec-business\">his report in the Washington Post<\/a>, Americans are saving more and racking up <em>less <\/em>credit card debt.\u00a0\u00a0 According to the Post, &#8220;Revolving credit debt, mostly through credit cards with balances that are not paid off immediately, dropped by an annual rate of 13.1 percent in August to $899.4 billion, the Federal Reserve reported.&#8221;<\/p>\n<p>No doubt, this behavior is a direct result of my constant pleadings to the readers of this blog to join the &#8220;dead beat&#8221; club, those who pay off their balance in full ever month rather than pay interest.\u00a0\u00a0\u00a0 The article does point out that this kind of behavior could also be a reaction to the recession, as people become more cautious in their spending.\u00a0\u00a0 Either way, this is good news for the consumers who are paying less unnecessary interest.<\/p>\n<p><strong>0% Intro Rates Are Disappearing<\/strong><\/p>\n<p>Everyone is familiar with the 0% introductory APR offers.\u00a0\u00a0 Now, <a href=\"http:\/\/www.abcnews.go.com\/Business\/credit-card-balance-transfers-ending\/Story?id=8767730&amp;page=1\">word comes from ABC News<\/a> that these offers are on the way out.\u00a0\u00a0\u00a0 I for one am happy to see this happen.<\/p>\n<p>Let me explain.\u00a0\u00a0 The 0% APR never existed in the first place.\u00a0\u00a0\u00a0 This was largely a gimmick designed to get people to transfer balances to new cards.\u00a0\u00a0\u00a0 There where two parts to this trick.\u00a0\u00a0 The first part was the balance transfer fee.\u00a0\u00a0\u00a0 This was 3%\u00a0 of your balance and, as the article points out, this has increased to 4% or 5% at most banks.\u00a0\u00a0\u00a0 So the banks got 3-5% added to your balance right from the start.\u00a0\u00a0\u00a0 Then it gets better, for them that is.\u00a0\u00a0\u00a0\u00a0 Every charge you make after the balance transfer incurs all sorts of interest up until you pay off the balance with the 0% introductory rate.\u00a0\u00a0\u00a0\u00a0\u00a0 The allocation of payments to the lowest interest rate balances first is one of the unfair practices that is being outlawed by the CARD act.\u00a0\u00a0\u00a0\u00a0 It is therefore, no surprise, that banks cannot sustain 0% APRs without that little trap, buried in the fine print.<\/p>\n<p>The 0% offers are still out there, but the terms are shrinking from a year to six months or less.\u00a0\u00a0\u00a0 There are still some situations where this might make sense.\u00a0\u00a0\u00a0 I suppose if you had a high enough interest rate and you accepted a balance transfer, the 3% &#8220;fee&#8221; might be worth it.\u00a0\u00a0 For most people, it is just a way to shift your debt from one bank to another, giving you the appearance of a savings, but with little result.<\/p>\n<p><strong>Where 0% Financing Makes Sense<\/strong><\/p>\n<p>On the other hand, I often make purchases directly with merchants who offer 0% financing.\u00a0 There is a local furniture store that I won&#8217;t haggle with me on the price, but they will offer very generous financing terms at 0% for a year or more.\u00a0\u00a0\u00a0\u00a0\u00a0 Yes, I would gladly pay your $1000 next year for my dinning room table rather than $1000 now.\u00a0\u00a0 My theory is that the financing company actually offers the store free financing in the hope that the customer misses the final payment and gets assessed the penalty interest rate.\u00a0\u00a0\u00a0 With electronic bill payment, I can schedule the pay off a year in advance and never have to worry about being late.\u00a0\u00a0\u00a0 So far, the largest purchase I have ever made like this was on my hot tub.\u00a0\u00a0 I had over a year to pay off that several thousand dollar purchase.<\/p>\n<p>The most important thing to remember when accepting 0% financing is that you must be able to budget your money in advance.\u00a0\u00a0 You have to be able to know that you will have the money on hand to pay off your purchase before the introductory rate expires.\u00a0\u00a0\u00a0 As the bills explain, the interest accrued, but is merely deferred until after the introductory period.\u00a0\u00a0 Fail to pay it off in full by that time, and you will owe interest on the entire balance from day one.<\/p>\n<p>It is not for everybody, but if you can pull it off, it is a nice offer when you find it.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shocking news today as Americans are actually reducing their credit card debt.\u00a0\u00a0\u00a0\u00a0 According to this report in the Washington Post, Americans are saving more and racking up less credit card debt.\u00a0\u00a0 According to the Post, &#8220;Revolving credit debt, mostly through credit cards with balances that are not paid off immediately, dropped by an annual rate [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[13],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.10 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Credit Card Debt Down; 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