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How Interest Rates On Credit Card Offers, Even The Greatest Ones, Can Jump From 0% To 30%

The spectrum of credit card interest rates continues to reach unusual extremes, from 0% for customers with great credit to 36% for those searching for second opportunities to repair their credit.

The average interest rate on credit cards has shot up to 20.58%, up from 17.01% a year earlier, following 10 swift rate increases by the Federal Reserve in more than a year.

Those 36% rates? It’s a component of a Premier Bankcard, which is offered to consumers who wish to repair their credit scores back up from the 500+ level and starts with an incredibly low credit limit of $200 to $700. Fee per year: $50 to $125, depending on creditworth.

Retail cards’ annual percentage rates, or APRs, also skyrocketed to about low 30%. Early in July, the APR for Macy’s store accounts was 31.74%. It was 30.9% for the Nordstrom card. If the prime rate increases once again, which could happen as soon as July 26 should the Federal Reserve raise short-term interest rates as some anticipate, both rates will increase.

0% Is Still Quite Alluring

Are 0% APR credit card offers a pipe dream? No, those special rates are still available, just as the 0% to 3% incentives that automakers provide during the summer sales season to move a limited number of cars and trucks.

In terms of both balance transfers and new purchases, zero percent deals are surprisingly prevalent these days, according to Ted Rossman, senior industry researcher.

Increasing From 0% To Around 30%

It’s crucial for customers to understand that card issuers may use 0% as a loss leader because they know they will profit more if you don’t pay off the bill in full before the 0% period expires and the higher rate takes effect.

Consider a Discover card with a 15-month 0% introductory offer on balance transfers and purchases. To be eligible, the balance transfer must post to your account before October 10th. According to the web notice, your APR will range from 16.99% to 27.99% when the introductory rate expires, depending on your creditworthiness. The prime rate will determine how this APR changes with the market.

For card issuers, Rossman said, the “real sweet spot is if people carry balances but avoid default, and an increasing number of cardholders are balance carriers that still pay on time.”

Rossman claimed that for card issuers, the “real sweet spot is if people carry balances but avoid default, and an increasing number of cardholders are balance carriers that still pay on time.”

For Whom Is A 0% Promotion Available?

It should come as no surprise that you must have good to excellent credit, or a credit score of 670 or more, to be eligible for a 0% offer. Since the average FICO score is 716, most people have that, according to Rossman.

Even if receiving a 0% offer in the mail is encouraging, it doesn’t mean you’ll be approved for the card. The website features a box that estimates your chances of being approved in addition to listing offers. It’s a soft credit estimator that is free to use.

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