You have almost certainly received a credit card 0 apr offer in your mailbox or email inbox. Some people apply for every 0 apr credit card that comes their way. Others opt to avoid applying for these cards altogether. What both types of people will find is that there are good offers and bad offers when it comes to 0 apr credit cards. More importantly, there are things that you can do to maximize the benefit that you get from these credit cards. The most important of these things is that you can think in the short-term about paying off any debt that you put on a 0 apr credit card.
Types of 0 APR Credit Cards
The credit card 0 apr offer might apply to a number of different types of credit cards. A common credit card that you'll see like this is the credit card that offers zero percent interest on balance transfers. However, you might also be offered 0 apr credit cards that are for purchases. In order to make sure that you maximize your use of these cards, you need to make sure that you're clear on what type of credit card you have. You need to be sure that you clearly understand what the zero percent applies to and what the interest rate is on the rest of the card. For example, if you have a zero percent apr on balance transfers, you need to learn what the apr is on purchases.
Thinking Short-Term
The key to making these cards work for you is to think in the short-term. In other words, before you even get a 0 apr credit card, you need to consider how you're going to pay that card off in the immediate future. Many people make the mistake of figuring that they will deal with the debt in the future when the interest rate goes up. By then, it's too late. You want to pay off the debt during the time that the card is in the zero percent period in order to maximize the purpose of 0 apr credit cards. To do this, you need to set forth a budget and payment plan before you even get the card.
Creating a Monthly Payment Plan
To really think in the short-term about paying off 0 apr credit cards, you need to get organized about your finances. The first thing this means is taking a look at the balance owed on the card. If you are going to do a zero apr balance transfer, include the fees associated with the transfer in the final amount owed. If you're going to make purchases on the card during the zero percent period, guesstimate the total amount of those purchase. Next, consider the length of the 0 apr period. You'll divide the total owed by the total number of months in this period to learn what you need to pay each month to maximize your use of the card. For example, if you owe $1000 on the card and the 0 apr lasts for 10 months, you need to pay $100 per month to have the debt paid off before the higher apr gets put into action.
How Long Do You Pay 0%?
The longer you don't pay interest, the better, of course. Some offers may give only 6 months or so of freedom from interest, while others go 15 or even 18 months. A long time without paying interest gives you more time to get things paid down.
What Will the Regular Interest Rate Be?
If you're going to be carrying a balance, the interest rate you will be paying normally matters. It is possible to find a low interest rate combined with a starting 0% APR.
What Does the 0% APR Apply Toward?
If it just goes to balance transfers, you won't be getting any help with purchases made during the initial period. But sometimes you can get it applied to both, or at least a low interest rate on purchases to start things off.
You'll also want to know about any fees associated with balance transfers. Sometimes these will eat up a lot of your savings. However, there may be a cap on the transfer fee which can help.
What About Rewards?
If you like rewards cards, some of them offer 0% or low APR credit cards as well. Consider what you want from the card. If you can get good rewards along with no interest to start and a good interest rate, it's probably a good choice for you.
What Credit Card Issuer Do You Prefer?
It's not always rational, but sometimes you just flat out prefer one company over another. You may have preferred their service in the past, or just trust the brand. So long as this isn't outweighed by other factors, there's nothing wrong with going through an issuer you trust.
Choosing to switch to a credit card that isn't charging you interest can be a great financial decision. You can save quite a bit of money during the initial period, and get those old debts paid down. There's a lot to be said for it for just about anyone who is carrying a balance on their cards.
Take the time to research the various cards so that you know which are right for you. Some cards are better than others for a variety of reasons, and the first offer you see is not necessarily the right one for you.
Both Robert Alan & Stephanie Foster are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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