In the latest sign that the credit crunch is spreading, the AP reports that the rate of delinquent and defaulting credit card accounts has skyrocketed recently. Credit card companies have been revising their estimates of 2008 write-offs upward due to defaults; for instance, Capital One last month projected at least $4.9 billion of default-related write-offs.
Every issuer has responded in at least some way to mitigate their risks. This is most evident in my survey of offers to new customers. Here are some illustrative examples:
- Just in the past month, Discover has reduced the intro 0% period for purchases on their consumer cards from 12 months to just 6 months.
- Despite the decline in the prime rate, Capital One has increased the APR on its consumer cards by half a point, also in the past month.
- Chase has also been aggressive in systematically reducing its exposure by making its balance transfer offers much less attractive. While Chase’s offers of 12 months at 0% APR used to be plentiful on its affinity cards, the available options have shrunk immensely. In fact, the number of cards that offer an intro 0% APR for 12 months has shrunk from well over 100 a half year ago, to just 7, by my latest count. The max balance transfer fee has also increased on many cards, from $75 to $99.
These changes appear to be working for Chase, as its trust was the one exception in October where delinquencies and defaults both declined. Unfortunately for deal-hunting credit consumers, this may translate into deals being leaner in the times ahead.
For reference, here are the 7 Chase offers that I found still carry a 0% intro APR for 12 months:
On an off-topic note, does anyone else find it oddly coincidental that the only university-related card with 0% for 12 months represents a team playing for the national championship in football?
