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Tougher Times for Good Report

By Faye Mergel
Published: Sunday, September 6th, 2009

Those who want to get their credit records now might as well prepare themselves for poorer reports. Consumers are expected to have more difficulties in keeping good credit records as lenders lay out new credit rules. Among the problems consumers will face are higher transaction charges and diminishing credit card deals. Lending companies have also become picky in who they will lend money to, making it harder for more consumers to fix their credit records.  However, the greatest problem that card holders have yet to face is the possible disappearance of the zero percent market.

Tougher Times for Good ReportThose who consistently get good reports will suffer most from the disappearance of this zero percent market. People who have good financial records are allowed to use their cards for a period of up to 13 months without paying interest. The only payment they have to make during this period is a transfer fee. It is for this reason that many consumers strive have to keep their records clean. Now that there is a possibility for zero interest rates to disappear, consumers may have to cutoff on their credit activities.

This situation is even worsened by an increase of transfer fees.  Before, one can avail as low as 2% transfer fees on zero percent deals. Now, the trend goes up to 2.9%. Some banks even raised transfer fees to as high as 5%. Since this trend is initiated by major banks such as MBNA, experts predict that other providers will soon follow.

This is also bad news for credit tarts, that is, those people who grab 0% interest rates then switch to other 0% deals once their current deal expires. Once this zero percent market is gone, they will no longer be able to jump from one 0% deal to another.

The disappearance of zero interest rates is still a possibility. Yet many consumers are already taking on the alternative. The solution: low lifetime balance cards. These are just like ordinary credit cards, except that they have lower rates. Rates are typically around 7% to 9%, way lower than the 14.94% average consumer credit card rate.

However, not everyone can avail of this deal. Seats are limited only for those who have outstanding scores.  However, many consumers, rate tarts in particular, say that this is better than jumping from one card deal to another every six months or so. With transfer fees rising and zero percent term getting shorter, this might be the best alternative for people who keep a clean record.

Despite this credit crisis, consumers should make better credit decisions so they can see improvement on their next credit reports.

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