Credit Cards

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Monday, September 20, 2010

News from Discover Bodes Well for the Future of 0% Credit Cards

Discover More Black CardThe stock market performed well today. The Dow Jones Industrial Average (DJIA) gained 1.37% to close @ 10,753.62, while the broader S&P 500 added 1.52% to close @ 1,142.71. Financial stocks contributed to the day's advances, with companies like American Express (+3.6%) and JP Morgan Chase (+2.1%) looking good to investors.

Another shining star in the financial sector was Discover Financial Services, which gained 2.4%. Earlier in the day, the company reported third-quarter net income of $261,000,000, and added:

"...Credit performance continued to improve, with net charge-offs down $102 million from the prior quarter and a net chargeoff rate for the third quarter of 7.18%...'

"...The very positive credit trends that began to manifest themselves earlier this year continued to benefit our results this quarter,'...'The ongoing improvement in the outlook for credit performance of our cardmembers has enabled us to accelerate investments for long-term profitable growth. In addition, Discover card spending continued to grow nicely this quarter and our third-party credit and debit network businesses achieved record transaction volumes..."
This news is significant because it means that the approval rate for the most popular 0% credit card we recommend here at, i.e. the Discover More Black Card -- is very likely to increase. Great news for anyone shopping for a consumer-friendly 0% Intro APR credit card.

Another reason stocks did well today: According to the National Bureau of Economic Research, the Great Recession ended in June of last year, which means talk of a double-dip recession for the United States should abate:

"...The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.

In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month..."

Of course, we could get another economic downturn in the near term, but if we do, it would be considered a new recession, and not a double-dip for the recent Great Recession.

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