Banks are vying to supply Aussies with credit in the lead-up to Christmas, according to RateCity’s Rates of the Nation report.
More honeymoon deals are being offered by banks to coincide with the end-of-year shopping period, a time of year that’s not only traditionally associated with yuletide carols and candy canes, but a prominent credit spike.
According to research from Veda, the number of application enquiries for credit cards in the December quarter increased by an average of just over 10 percent annually over the five years to 2012. It’s no wonder, then, that banks are increasingly offering such deals at the moment in order to entice buyers when they’re most likely to spend.
“While we’re seeing this trend in the lead up to the costly Christmas and holiday season, we expect the competition from the banks to shift towards the balance transfer credit card space in the New Year as Australians struggle to pay down the debt they’ve accumulated over the festive season,” said Peter Arnold, RateCity’s product director.
With spending on the horizon as the silly season gets closer and closer, individuals may be wondering how to get a great deal for their needs.
Is zero percent the way to go?
The honeymoon deals offered by banks are introductory offers that give consumers a zero percent introductory purchase rate for a set period. With Australians looking to spend large during the holidays, it’s not surprising they’ve become increasingly available.
“The average introductory deal offered by the major banks on purchase rates has doubled [quarter-on-quarter],” stated RateCity’s Rates of the Nation report.
There are a number of lenders offering such deals, with both the majors and non-banks competing for new business. For instance, National Australia Bank’s Low Rate Card offers a zero percent introductory purchase rate for 15 months. Citibank‘s Platinum offers the same.
Meanwhile, Westpac‘s Attitude, Attitude Black, Attitude Platinum and Earth Black all offer a zero percent introductory purchase rate for 12 months.
Interestingly, while the number of balance transfer deals also increased, the lift was somewhat slight.
Are balance transfer deals all that?
As of July 1, there were 117 balance transfer deals on offer. This climbed to 124 deals on October 1 — an increase of seven deals.
Balance transfer offers allow individuals to transfer their credit card debt from one lender to another, often obtaining the benefit of a no-interest period.
This makes such offers popular among Australians looking to drive down their debt — they can focus on paying off the credit card balance, without being stung by interest.
Watch your debt this Christmas
While it’s tempting to spend up large over Christmas, it’s not worth getting into long-term debt for the sake of short-term festive cheer.
Complete a credit card comparison online to make sure you’re getting the right product for your needs, and consider setting a budget for spending over the break.
From food and drinks to presents and travel expenses, spending can quickly get on top over you if you’re not careful!