The Truth About 0 APR Credit Cards

Category: Finance, Credit.

If you are struggling with ever- increasing credit card debt, a 0 APR credit card could be the magic wand for you.

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. There are a number of 0 APR credit cards in the marketplace. The Truth About 0 APR Credit Cards. These cards have many benefits to offer if you have a good to excellent credit rating. These types of 0 APR credit cards are offered by popular credit card lenders including American Express, Chase, Citibank, HSBC, and Discover. Keep in mind, that the zero percent offered with these cards is not permanent. At the end of the interest- free or zero percent periods, cardholders will have to pay a higher ongoing interest rate.

It is an introductory rate and is typically offered for ninety days to as long as 12 months. Generally, these rates could vary between 10% - 14% and sometimes can be as high as 24% . There will be no interest charges for the in and you will have the introductory buffer period to pay off the expense. A 0 APR credit card is ideal when you want to purchase something expensive but cannot find another way to finance it. But buyer beware. make sure you can pay the purchase off before the introductory APR expires. This is one of the best methods to pay off debts at a faster rate, leading to substantial savings on the interest charges incurred.

Most 0 Interest credit cards allow balance transfers from your existing higher interest cards and many will waive the transfer fees. It is possible that a single credit card can have multiple APRs including the following: 1) One APR for balance transfers, and one for, one for purchases 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. However, it is essential to be informed about the often- untold catches in these lucrative offers. The Traps to Watch Out For: A 0 APR credit card is an attractive proposition, and often is too tempting an offer to resist. The 0 APR is a Limited Time Offer- In general, the 0 APR offered is only for a limited period. This implies that purchases made during this period will not attract any interest. The period could vary from 3 months to 12 months.

You need to be cautious about the expiry period and remember to pay off before the period ends inorder to avoid hefty interest charges. 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. Once the introductory period is over, the 0 APR credit card may have a ridiculously high interest rate like 20% or higher. Late payments will result in penalties that include shifting the remaining balance to a much higher APR. If not, the default high interest rate could be applied to the entire balance. Complete Payment- Certain 0 APR cards require you to pay off the balance entirely before the expiration period of the introductory offer. Ensure that you understand these credit card terms clearly.

However, there are some cards that offer 0 APR on balance transfers only with higher applicable APR s on new purchases. 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. Other Fees- Some credit card companies compensate the 0 APR by charging high annual fees or transfer fees on balance transfers. 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. Cap on Balance Transfer- Certain cards may have a cap or limit on the balance transfer amount. While it may be an attractive offer to go for 0 APR credit cards, it may not be a wise decision in certain scenarios.

Read the terms and conditions carefully to avoid credit traps. So, before you seriously consider a 0 APR credit card, it is essential to compute credit balances, and your pay, interest rates off capability. Understanding the fine print could have substantial savings apart from trouble free credit rating.

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