Are 0 Percent APR Credit Cards a Thing of the Past?

Remember all those 0 percent APR credit card offers that practically bombarded you on a weekly basis? As the economy continues to nosedive, along with plummeting bank earnings, you might be wondering what happened to all those great deals.

Financial Institutions Cut Costs

Not long ago, droves of 0 percent APR credit cards flooded mailboxes across the nation. They provided consumers a simple, no-fee option of transferring existing high interest credit card balances onto a new card at 0 percent interest for up to 18 months. The 0 percent balance transfer feature has been very effective at attracting new applicants, but has unquestionably been a “loss leader” for banks and card issuers. The past year has brought about unforeseen changes in the financial industry though, resulting in a drastic reduction in the number of cards being marketed to consumers overall. Banks and other financial institutions simply aren’t making anywhere close to the profits they used to. Foreclosures, bankruptcies and mounting collection costs in our struggling economy have dramatically affected earnings and the stability of the financial industry. Card issuers have very few choices in this crippling recession: they can either increase fees or eliminate products that are diminishing their profits. Given the nature of these “loss leader” 0 percent promotions and the financial pressure that banking and lending institutions are under right now, it’s easy to see why credit card offers like these are fading from view.

0 APR Transfer Fees Are Costly

This type of credit card is still around, but there’s been a huge drop in the number of offers extended ? especially for fee-free balance transfers. Today, if you come across an offer, it’s more likely to include a higher balance transfer fee. Today’s offers have consumers paying around a three percent transfer fee with a minimum fee of five dollars to 10 dollars, and an unlimited maximum fee. Translated, this means that the cost of transferring an $8,000 card balance to one with an introductory offer for a three to six month period comes with a hefty $240 dollar fee.

There is talk among financial experts that these cards could become a thing of the past; mostly because the providers are becoming more anxious over the state of credit card billing in this economy. But for now, cards offering zero percent still exist; just in very short supply, and usually minus the fee-free transfers.

Understanding the Terms and Conditions

If you receive an offer, making sure you understand the terms of a card before choosing one is critical. Very few fee-free credit cards still exist, but if you happen to find one, you should understand that they come with very strict stipulations. For example, a common stipulation is that the balance transfer is only free if the transfer occurs within the first couple of months of opening the account.

Do not skip reading the fine print and legalese if you are considering any credit card offers. Terms and conditions of credit cards can vary greatly from one card to the next. It’s also important to understand that most of these card offers now require excellent credit. Receiving a “prequalified” offer by mail is no guarantee that you will even get approved nor qualifies you for the most beneficial terms being offered either.

Being approved for these card offers means that you are required to follow the terms and conditions explicitly ? no exceptions ? or you will immediately lose all of those attractive introductory rates and any perks that were part of the deal. Being just one day late or going over your credit limit by even a single penny can quickly send your account into a much less favored status, including much more expensive financing charges and accompanying fees.

These types of heavily incentivized offers are very costly for banks and card issuers and because of the dwindling state of the economy will only continue to slowly, but steadily, drop off the radar screen. They may not completely disappear but they will certainly not be as heavily promoted as they have been in the past few years. As banks and credit card issuers continue to tighten their belts to reduce operating costs and other expenses just to stay afloat, reducing the number of heavily incentivized offers being solicited to consumers is simply a matter of survival for many.

Understanding What the Credit Crunch Means for Key Groups

Newspapers and magazines have been filled with images of the Great Depression for two weeks as the stock market has rocketed up and down. Many Americans are now wondering exactly what is a good credit score. Some are looking at 401k accounts that have dropped 45% or more seemingly overnight. In order to actually remember the Great Depression, however, a person would need to be 79 years or older. That stock market crash happened in 1929. The images of shanty towns and bread lines are terrifying even today, but are they realistic? What does the current situation mean for younger Americans, especially students, minimum wage workers, and small business owners? How will the credit crunch affect their lives and livelihoods? what is a good credit score

For students, many of whom have never been forced to make a difficult choice in their lives, some hard realities are in the wind including:

• Shrinking college funds at just the time the money is needed. This translates to a greater need for financial aid and grants, sharp curtailment of out-of-state educational choices, and the potential need to work during their university years.
• Tighter requirements for student loan and grant applications, especially those from private lenders. Additionally, with more students needing this money, there will be less of it to go around.
• Setting up a different time table. Completing a college degree could take longer for students who must work and who can therefore not take a full class load.
• More uncertainty in the future. Depending on the state of the economy at the time, graduating students may not be able to find a job, especially if they chose to major in a field that is overly saturated with workers.

There is also the real factor that if these students require more financial aid and grant money, they are going to enter their working lives already saddled with a heavy debt burden that may keep them from taking other major steps in their young adult lives like marrying or acquiring a first home.

These college students will be getting an early taste of what the minimum-wage American worker has been experiencing for years. At the end of July 2008, the minimum wage in the U.S. went from $5.85 to $6.55, an increase of 12 percent. That still means, however, that a full-time minimum wage earner makes only $13,624 a year. The poverty line for a family of three is $17,170 a year.

These are people who depend on credit for the major purchases in their lives. They are used to having to pay off cars and appliances, but they are also the first sector of the economy to be hardest hit by a factor like $4 a gallon gasoline. Do they feed their kids or buy gas to get to work?

For people already living paycheck to paycheck, an inability to get credit means deferring any major purchases, which in turn affects the broader economy as it depresses the state of retail sales. Those figures dropped 1.2 percent in September, the third declining retail month in a row, and the largest drop since August 2005. That’s a sure sign that the American consumer is feeling unprecedented financial pressure.

That pressure, in turn, affects the small businessman who will see a commensurate drop in profits that will change his ability to:

• buy and maintain inventory.
• improve and maintain equipment.
• hire workers and provide benefits to them.
• maintain his present workforce.

In a financial situation like the one currently being faced by Americans, discretionary spending is the first thing to go. Any business that can be defined as a luxury, for instance hiring someone to cut the lawn or clean the pool, will feel the crunch first. With limited lines of credit to weather the storm, many of these businesses will go under.

When the nightly news talks about the new scarcity of the auto lease agreement or warns of the rising number of home foreclosures, it’s easy to imagine those things being a problem for someone else. When you have to tell your child he can’t go to the school of his choice? When you find yourself walking to work because you can’t afford gas? When you have to let your workers go? That’s when the credit crunch gets personal and close to home. Will it happen? It is happening. Will it get worse? That is more difficult to answer, but most analysts agree there is no quick fix for the current situation and people should expect little improvement until some time in 2009 at the earliest.

Game Site Update

Well its been about a month and a half now since I purchased my online arcade and things aren’t going quite as planned. Two months ago I had envisioned having a ready made game site that I could have loaded onto the server along with my blog and another website of mine: www.experiencenewthings.com (blog turned game directory). I also thought that after a month or two the site would be full of gamers and have already paid for itself a couple times over. To my chagrin this has not proven to be the case. While things aren’t going bad they just aren’t like I expected.

Cost/Benefit Analysis

Right now the numbers don’t look good, but I am still optimistic that I can turn them around. The expenses significantly outweigh the income that I am currently receiving. While the game script was a one time expense I have yet to recoup that and am currently not making enough on it to pay the $105 annual cost of the domain name and hosting service.

The costs:
Game site script –         $250
Domain Name –             $10
Web Hosting Service – $ 95
———-
Total Costs:                    $355 (first year)
+$105 (subsequent years)

Last month I made a little over $2.00 in adsense advertising on my game site. This month I am projecting just under $4.00. Yea thats two dollars and four dollars not two hundred or four hundred. One thing that I didn’t count on when adding adsense to this site was how cheap the pay is for the ads that my site attracts. I average less than $0.05 per click and a lot of patrons are not going to click your banners so that means that I need a ton of traffic if I expect to make any real money using adsense. I am considering looking into other means of advertising on my site.

Traffic

So if it takes 20 clicks on my site to earn me 1 dollar and one in two hundred people click on one of my banners, then it would require my site to get 4000 visitors just to earn a dollar. Right now I am averaging 200 visitors a day. Those 200 visitors play an average of 2.5 games each for a daily total of about 500 games played per day. At the end of last month I hit my first milestone 10k games played. This month the sites on schedule to have 25k games played which is a 50% increase from last month to this month.

Currently my game site is still not ranked by google’s page ranking system. This makes it a little hard to exchange links and improve traffic. Also once I am ranked I hope to improve my search engine result status. So I look forward to getting my page ranked as it should help boost traffic. I’m hoping for a high page rank, 3-5 would be awesome.

I am also looking into other methods of boosting traffic. Some possibilities include: directory submissions, link exchanges, and social networking ( word of mouth is great advertising!)

Site Maintenance/ Upgrades

While the game script I bought was pre-made and ready to go from day one (which saved me a lot of time and effort) there is still significant work to make enhancements to the site that will distinguish my site from all the other game sites out there. So far I haven’t gotten around to any of the heavy lifting as far as enhancements go. I have added several new games and continue to add games daily. Major work that I have slated for the near future include redoing the entire theme of the site including background, graphics and logos (possibly music?). And the other major task is rewriting a couple of the methods in the game site script to perform a few extra functions that I think are really important such as sorting the games by top ranked or most played.

Then there is always the constant maintenance of adding games, checking out and fixing user reported errors, responding to user email and requests to exchange links or promotional offerings. All of this stuff takes time, but as I mentioned earlier I am still optimistic that I can really turn my game site into something special.

Future Plans

As I stated above I still have a lot of work cut out for me in regards to building traffic, enhancing the website, and becoming established. At the top of my agenda are the site enhancements including revamping the site theme. I think it is important to get this done before I have a large customer base, people often don’t like change. As soon as that gets done I will dedicate the majority of my time to just increasing traffic. Customers are the driving force for any business, so its important that I get the word out. After that I will re-evaluate how everything is doing and see if I can identify what I am doing well and what needs improvement and work from there.

———————————

Zero interest credit card offers