Interest rate gimmicks drive credit card churn
Credit reference bureau Baycorp Advantage said credit card applications in Australia jumped by 28 per cent during the June 2005 quarter, which Baycorp said was the biggest increase in at least three years. Baycorp said there were 955,000 applications for new credit cards during the quarter, up from 749,000 in the March 2005 quarter. The proliferation of new credit card products, many of them offering misleading “zero” or low interest rates on balance transfers, appear to be driving the demand. Baycorp said it appears that the demand is being driven by existing credit card holders moving their existing balances onto new cards, rather than actual demand for new credit.