However, there are instances when they get to have the chance of seeing promotions like 0% APR. Now, this is really something. But the question is, is it true? Is there a great probability that credit card companies can actually offer a 0% APR?
For most financial experts, they contend that it is, indeed, possible. In fact, credit card companies would definitely go for this kind of scheme just to get the consumers on their hook.
That sounds too good to be true, indeed. But the question is how come they can offer something so good just like that?
Normally, 0% annual percentage rate or APR lasts only for 6 months. The countdown starts from the day the credit card is claimed.
In most instances, 0% APR are attractive to people who would want to have a balance transfer. This is because they would want to consolidate all of their debts into one payment only. And because they have a huge pile of debt, they would rather go to a credit company that can offer them lower interest rates.
With things like 0% APR credit card, who can resist them?
Moreover, with the 6-month timeframe, people will get to have the chance of paying their standing debts for a whole six month-period only. That would be a lot of savings.
But then again, 0% APR credit cards are not at all beneficial to everybody. As they say, there is always an exception to the rule. This refers to those who do not accumulate interest charges simply because they have outstanding balance. So, they wouldn't feel the necessity of getting a 0% APR credit card.
The best credit cards for these types of people are those that offer rewards and cash backs instead of lower rates.
All of these boil down to one point, that people must be aware on how these wonderful offers can provide them the benefit that they want.
Indeed, there are lots of rewards and 0% APR credit card out there. But if it will not work for those who do not really them because of the mentioned situations, then it's best not to have them at all. Besides, the best 0% reward is not to have a credit card at all.
1.) Transfer your existing credit card balances to a new 0% APR credit card.
2.) Continue to pay down your balance as usual. But instead of paying only the minimum each month, also pay the amount of interest you would have paid with your other card. This will reduce your debt even quicker!
3.) Watch your introductory period. When it's about to expire, shop around for a new 0% APR credit card and transfer your balances again.
4.) Continue this cycle until you become debt free.
0% APR Credit Cards vs. Debt Consolidation
So you're considering a debt consolidation loan instead of a 0% APR credit card. Let's see how much you could save and how much quicker you could pay off your debt using the method shown above. Here's an example:
Assume you have an existing credit card debt of $15,000. You would like to pay $250 per month until the debt is paid off. Your debt consolidation loan was approved at 7% (much lower than your original 12% credit card!).
Beginning Balance $15,000
Total Principal Year 1 $2,014 Total Principal Year 2 $2,160 Total Principal Year 3 $2,316 Total Principal Year 4 $2,483 Total Principal Year 5 $2,662 Total Principal Year 6 $2,855
Total Interest Paid $3,516
Total Amount Paid: $18,516 TOTAL # Payments Made: 70
Now let's compare paying off this same debt using 0% APR cards:
Beginning Balance $15,000
Total Principal Year 1 $3,600 Total Principal Year 2 $3,600 Total Principal Year 3 $3,600 Total Principal Year 4 $3,600 Total Principal Year 5 $ 600 Total Interest Paid $ 0 Total Amount Paid: $15,000 TOTAL # Payments Made: 50
You save $3516 over a six year period. Plus, you'll be done with your payments 15 months sooner. Imagine being debt-free more than a year before you planned!
Words of Advice:
Although using 0% credit cards to pay down your debt is a great option, try not to switch credit cards too frequently. Doing so can negatively impact your credit report. Shop around for 0% APR credit cards that have the longest introductory periods and the lowest APRs (after the intro period) to buy you a little breathing room.
Also, don't fall into the trap of spending again on your old credit cards. Either close them or deactivate them so that you don't get yourself into further debt. And don't overspend with your new card either (even if it is 0%)! Finally, make sure you apply the money you saved on interest to your new payments to help eliminate your debt faster.
Both Nicky Pilkington & 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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