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Competition in the credit card industry has never been higher, and as a result, there has never been a better time to get a new credit card than right now. Introductory bonuses, reward rates, and no-interest introductory periods are all more generous than ever, and the industry average for annual fees continues to decline.
When lenders compete, consumers win
In recent years, competition among credit card issuers has heated up -- especially for consumers with great credit. It makes sense, as credit card debt comes with relatively high interest rates. Borrowers with excellent credit pay an average interest rate of more than 13% on credit card purchases, even though this group has little risk of defaulting.
To attract lucrative customers, credit card issuers have been consistently trying to one-up each other when it comes to introductory bonuses, 0% APR periods, and the rate at which cards earn rewards. Not long ago, a 21-month 0% APR period or a 2% reward rate on all purchases was unheard-of; now it's readily available.
According to WalletHub's
- The value of initial rewards bonuses hit a record high during the third quarter, with an average of $101.48 in cash or 15,664 points/miles. New applicants can now get 313% more cash or 123% more points/miles than they could in 2010.
- The average 0% APR introductory period for new purchases is 9.8 months, up 2.3% from a year ago.
- The average cash-back rewards rate has risen 2% from last year, and the average initial bonus has grown by 2.3%.
- For points/miles cards, the average initial bonus is up by 9.4% over the past year.
- The average annual fee has fallen for five straight quarters, down 5.85% over the past year.
- Foreign transaction fees have been falling and are now 20% lower than at the beginning of 2011.
One downside is that interest rates have been increasing slightly. Credit cards typically have variable interest rates, and given the widespread anticipation that the Federal Reserve will raise interest rates in December, it appears that credit card companies are adjusting their rates upward to compensate.
But I'm not saying this is the best time to carry a credit card balance. Rather, now is an excellent time to take advantage of lucrative introductory bonuses and 0% APR offers. If you can do that without paying the credit card issuers a dime in interest, then you'll be a big winner.
Examples of great credit card offers
Just to name a few, here are some of the best credit card offers on the market right now.
For a big introductory bonus, the recently introduced Chase Sapphire
If you're looking to transfer a balance or make a new purchase without paying interest, the Citi
Finally, for a great reward rate, the Capital One
These are just a few of the offers available right now, and many other cards come with benefits that might make more sense for you, so shop around.
The bottom line
To be clear, I'm not saying that you should run out and get a credit card you don't really need, or that you should buy a bunch of things you don't need just for the sake of taking advantage of the excellent credit card market.
However, if you have some holiday shopping or traveling to do that you were planning to pay for in full anyway, or if you were considering applying for a new credit card for your day-to-day expenses, then now is an excellent time to capitalize on the fierce competition among credit card issuers.
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