If you are struggling with ever-increasing credit card debt, a 0 APR
credit card could be the magic wand for you. There are a number of 0
APR credit cards in the marketplace. These 0 Interest credit cards
offer cardholders zero percent on new purchases and certain 0 APR
credit card offers also allow balance transfers, lowering the interest
burden even further.
The Truth About 0 APR Credit Cards
These
types of 0 APR credit cards are offered by popular credit card lenders
including American Express, Citibank, Chase, HSBC, and Discover. These
cards have many benefits to offer if you have a good to excellent
credit rating.
Keep in mind, that the zero percent offered with
these cards is not permanent. It is an introductory rate and is
typically offered for ninety days to as long as 12 months. At the end
of the interest-free or zero percent periods, cardholders will have to
pay a higher ongoing interest rate. Generally, these rates could vary
between 10 % - 14% and sometimes can be as high as 24%.
A 0 APR
credit card is ideal when you want to purchase something expensive but
cannot find another way to finance it. There will be no interest
charges for the in and you will have the introductory buffer period to
pay off the expense. But buyer beware ... make sure you can pay the
purchase off before the introductory APR expires.
Most 0 Interest
credit cards allow balance transfers from your existing higher interest
cards and many will waive the transfer fees. This is one of the best
methods to pay off debts at a faster rate, leading to substantial
savings on the interest charges incurred.
It is possible that a single credit card can have multiple APRs including the following:
1)
One APR for balance transfers, one for purchases, and one for cash
advances ? the APR normally would be higher for cash advances compared
to balance transfers and purchases.
2) Tiered APRs ? Different
APR levels can be assigned for different account balance levels or
tiers, e.g., 15% for balances between $1 - $500 and 17% for balances
higher than $500, etc.
3) Introductory APR ? 0 APR as the introductory offer and a higher rate upon expiration of the introductory period.
4) Penalty APR ? A penalty APR rate may apply if you are late with your payments.
The Traps to Watch Out For:
A
0 APR credit card is an attractive proposition, and often is too
tempting an offer to resist. However, it is essential to be informed
about the often-untold catches in these lucrative offers.
1. The
0 APR is a Limited Time Offer ? In general, the 0 APR offered is only
for a limited period. The period could vary from 3 months to 12 months.
This implies that purchases made during this period will not attract
any interest. You need to be cautious about the expiry period and
remember to pay off before the period ends inorder to avoid hefty
interest charges.
2. Once the introductory period is over, the 0 APR credit card may have a ridiculously high interest rate like 20% or higher.
3.
On-Time Payment ? Most of these 0 Interest credit cards require you to
pay the minimum payment on time every month during the introductory
period. Late payments will result in penalties that include shifting
the remaining balance to a much higher APR.
4. Complete Payment ?
Certain 0 APR cards require you to pay off the balance entirely before
the expiration period of the introductory offer. If not, the default
high interest rate could be applied to the entire balance. Ensure that
you understand these credit card terms clearly.
5. Applicability
of the 0 APR ? Most of the 0 Interest cards offer the 0 APR on new
purchases and balance transfers in the introductory period. However,
there are some cards that offer 0 APR on balance transfers only with
higher applicable APR's on new purchases.
6. Other Fees ? Some
credit card companies compensate the 0 APR by charging high annual fees
or transfer fees on balance transfers.
7. Cap on Balance Transfer
? Certain cards may have a cap or limit on the balance transfer amount.
This means that the 0 APR will apply only for the amount within the cap
limit and anything more will be charged the default higher APR.
While
it may be an attractive offer to go for 0 APR credit cards, it may not
be a wise decision in certain scenarios. So, before you seriously
consider a 0 APR credit card, it is essential to compute credit
balances, interest rates, and your pay off capability. Read the terms
and conditions carefully to avoid credit traps. Understanding the fine
print could have substantial savings apart from trouble free credit
rating.
For more information on what to watch for in 0 APR credit card offers, Robert Alan recommends that you visit CreditCardAssist.com
