Credit card offers on the rise: 6 questions to ask when you get one in the mail

November 16, 2010

By Barbara Marquand | Money Rates Columnist

Credit card offers are making a comeback best credit cards 2012, and issuers are fighting for your business with low introductory interest rates.

Issuers sent 640.3 million offers for credit cards to U.S. households during the second quarter of this year, an 83 percent increase over the 349.1 million offers mailed during the same time a year ago, according to the Synovate Mail Monitor, a syndicated credit-card tracking service in New York.

Moreover, low-rate introductory offers jumped to 71 percent of all offers, the highest since the Synovate Mail Monitor began tracking the data in 1988.

Chase sent the most offers, quadrupling the number of mailings it sent in second quarter 2009; Citibank, the second largest mailer, sent almost triple the number of mailings from first quarter 2010, and Discover sent 70 percent more mailings in the second quarter than the previous three months, the Synovate Mail Monitor reported.

Before you jump for zero percent interest credit cards, consider the following:

1. When does the promotional period end?

Read the fine print of the offer to see how long that low rate will last.

2. What's the regular credit card rate?

Low introductory rates can be replaced by much higher ones down the road. Check how much interest you'll be paying on the credit card once the promotional period ends and compare that to other offers.

3. What happens if I pay late?

Chances are you'll lose the promotional interest rate if you pay your bill late, even by a day. New regulations from the Credit CARD Act, which prohibit issuers from raising interest rates on existing balances unless you're 60 days late, don't apply to special promotional rates or rebates on interest.

4. What kind of credit card is this?

Beware of "professional" credit cards. The name has a classy ring to it, but the deal could hit a sour note if you're not careful. These cards qualify as small-business accounts, which are exempt from the Credit CARD Act. Some issuers voluntarily extend some of the consumer protections from the new law to small-business accounts, but not all of them. Make sure you understand what type of account you're applying for, and read the fine print.

5. Will I qualify for 0 percent interest?

Credit card companies often tout offers for interest rates "as low as" a certain percentage, reserving the right to charge a higher rate after they check your credit. Check the account agreement once you're approved for the credit card to confirm the rate you're getting. If your credit is sketchy, you probably won't get the lowest rate.

6. Do I have to pay an annual fee?

There's no use going for cheap interest rates if an annual fee wipes out any savings you'd get. Fortunately, a trend toward charging annual fees hasn't materialized as expected in the wake of the new credit card regulations. Synovate reported earlier this year that less than a third of mailings were for credit cards with annual fees.

Don't be surprised if the credit card offers keep on coming. Syonvate projects issuers will send a total of 2.25 billion offers in 2010, a 62 percent increase over the 1.39 billion offers mailed in 2009. Compare offers carefully to get the best credit card for you.

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