Where have all the mailshots gone? Credit cards deals still available at a price!

Credit card application forms used to pour through the letterbox like rain in a tropical monsoon. The credit crunch has put an end to the deluge of "You have already been accepted for credit" letters and other leaflets touting for your business that cascaded on to the mat every morning.

Since the start of the credit crunch, which has dried up the cash that used to slosh around between banks, lenders don't have so much money to lend.

Additionally, the Government has been talking to the financial regulatory authorities about "responsible lending", meaning that banks and loan companies have become more cautious about who they lend to, because they don't want to stand accused of encouraging indebtedness.

Can you save money by switching to another credit card? Find out with Moneyextra's comparison service.

While green campaigners may be delighted that the junk mail is drying up, people looking for good deals may be disappointed.

Credit card companies often use sophisticated targeting methods, and either send their offers via the postal service to potential customers whose address they know, or get a distributor to put leaflets through the letterboxes of people for whom their products are likely to be suitable, based on the postcode in which they live.

Many lenders will also make special offers to existing customers, whose credit habits they are acquainted with. That is why it is always worth having a quick read of your junk mail before you consign it to the recycling bin.

So, as the ads dry up, and you are looking for a credit card deal, you may have to search for it.

Credit cards cost more...

Getting a good interest rate is becoming much harder, because in 2006 the Office of Fair Trading ruled that card companies would have to justify penalty fees for late payments and breaching the card's credit limit if the fee they imposed was more than £12. That effectively set a benchmark and since then most card companies have reduced their fees to the £12 threshold rate, and then tried to recoup the profits they lost from penalty charges by raising interest rates.

Michelle Slade, analyst with Moneyfacts, says, "In April 2006 the average purchase rate on a credit card was 14.9%. Today this has jumped to 16.4%. Previously only a select number of customers were being penalised, but now all borrowers are paying the price."

Credit card companies have also raised other fees. Michelle Slade adds, "The average interest rate for cash transactions has seen a marked increase from 18.1% to 24.3%. On top of this, the majority of institutions have increased their cash advance charges."

But there's no need to despair -there are still some good offers out there if you look hard enough. The number and length of introductory deals has increased. In April 2006 there were 58 cards offering 0% introductory purchase deals of up to 10 months. Today there are 85 cards with deals of up to 12 months. There is also an increase in the number of cards offering 0% balance transfer deals, from 82 in April 2006 to 99 today. Previously the cards offered up to 12 months, now they offer up to 15 months.

Credit cards with 0% purchase rates

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Annie Shaw
21 April 2008 © Moneyextra.com

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