Money Matters: Credit card bonuses, drawbacks await consumers in 2012
Experts are predicting that credit cards will see a serious resurgence in 2012, and they advise that some pitfalls await over-eager consumers. YNN's Tara Lynn Wagner filed the following report.
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2011 saw Americans once again pulling out the plastic. Consumer debt jumped 10 percent in November, and while a number of factors contributed to that surge, Adam Levin of Credit.com
says debit cards may actually be to blame.
“The entire brouhaha that started with the Bank of American $5 debit card fee that started driving people in droves away from debit cards and back to credit cards,” says Levin.
November's rise was actually the 13th increase in 14 months, a trend Levin says will likely continue into 2012 thanks to consumers having a little more confidence in the economy and a little more comfort with their cards as a result of recent reforms.
So how are card issuers planning to capture these once again credit-hungry consumers? For one thing, signing bonuses are back, big time. Levin says you can expect to see bigger cash back offers or extra airline miles.
“If you want me, what are you going to do to incentivize me to go with you versus the card down the street or the next homepage?” says Levin.
Issuers will also use zero percent balance transfer offers with longer terms and lower, sometimes non-existent fees.
But beware, Levin says. One misstep could lead you down a very dangerous path.
“If you miss one of the due dates on whatever payment they expect you to make, they could then eliminate the introductory offer, and now all of a sudden you’re paying a penalty rate, which could be devastating to you,” says Levin.
The other big trend for 2012 is that credit will be easier to come by, even for those with a less-than-perfect track record. But there's a catch.
“They might let you into the party, but the cost of admission may be almost prohibitive, especially if you’re going to run balances,” says Levin.
He says if your credit score is less than 600, expect to get an APR of 24.99 percent or more.
“It's not so much the access but what are you paying for the access. That's why it’s so important to make sure that you fully understand the rules of the road before you get into the credit car,” says Levin.