A no interest credit card seems like a good thing, and it can be, when used correctly. There are many examples of credit card companies providing this type of introductory 0 APR offer. These lines may be an ideal way to save money on finance changes and they may help you to lower the amount you are paying on other lines of credit. There are several things to know about no interest credit cards before you apply.
How Long Do You Have?
Credit card companies make a profit from the finance charges that they charge. Therefore, most offers for 0 APR will not last the full lifetime that you have the line of credit open. Rather, most offers like this are for a limited time, and more often than not, for a very limited time. Regulatory compliance dictates that all credit card issuers provide full disclosure of the terms of the credit line before you accept the offer. The single common mistake that most people make is not reading the terms and conditions thoroughly. You absolutely need to know what the terms are before you begin using the offer.
What Charges Count?
One aspect to consider about no interest credit card offers is the types of qualifying uses. For example, some lines will offer 0 APR for six months or even 12 months on balance transfers. Regular purchases on these types of offers will typically incur finance charges though. In addition to this information, also take note of what the APR on purchases and balance transfers will be after the introductory period is over. For example, it may jump to 20 percent after six months. All offers are different.
What Are the Terms and Conditions?
The introductory period usually lasts for the first three to twelve months after you open the account. During this time, no interest rates are charged to the card, but what items on your card that will not incur finance charges is different for every card. Most of these card offers will provide no interest charges on just money that has been transferred to the card from another account when you first open the account. In rare instances, some cards will offer 0 APR on purchases as well. Typically, the only type of card that offers an introductory no interest period on both balance transfers AND purchases are student credit card offers.
Getting More For Your Money
You can use these situations to your advantage and save significantly with these introductory no interest credit cards offers. For example, you have a credit line that has a balance of $3000 on it. Let's say for instance, that you are being charged 17.75 percent APR for that balance on an annualized basis. At that interest rate and taking into consideration typical minimum payment amounts, it will take you 11 payments at $300 per month to pay that off. Your total interest costs over that time period would be $271. Now, if you were to secure a no interest credit card with an introductory period of 12 months you could pay off the balance in only 10 months and you'll save $271 dollars in interest!
So when used correctly, a no interest credit card can save you a ton of money. Whenever you consider offers for 0 APR or any other type of offer for that matter, read through the offers terms and conditions thoroughly to know all the ins and outs and potential financial pitfalls that the offer may or may not have.
If you owed money on a credit card in the past, I’m talking about 15 or even 20 years ago, the best thing to do would be to pay off all the debt as soon as possible. Now there are great things like the Balance Transfer Offers – where credit card companies provide a lower or zero percent rate on any balances you transfer from other credit cards.
The balance transfer credit card is certainly a recent evolvement in the credit card market; initially credit card companies only offered a lower rate of interest to customers transferring a new balance. These initial offers were around 4 to 6 per cent APR on new balances transferred from other credit cards. Now there are a host of 0 per cent offers to choose from ranging from 3 months right up to 14 months. Many of the 0 per cent balance transfer credit cards also offer zero per cent on purchases for a small amount of time, usually around 3 months.
However, before you leap straight into signing up for a zero per cent credit card, as with anything else, you should always read up on the full terms and conditions of the product. For example always find out about any fees or charges like late or missing payments, what happens when you’re 2 or 3 days late sending your payment? Some credit card companies charge upto £20 every time a payment is missed!
Most, if not all, balance transfer credit cards charge what is called a balance transfer fee. This is something that has only recently been implemented by the card companies. For the last 5 or so years customers have simply switched from credit card to credit card every time their balance transfer period came to an end, at no cost. In the last year card companies have introduced a fee on any balances transferred. Typically the fees charged range from 2 per cent to 3 per cent of the balance transferred. In the short term this may seem rather expensive, 3 per cent on say a £6000 balance is £180. However over the course of a year it works out much more competitive than paying the average credit card APR of 16 per cent, in interest!
Finally, make sure you make a note of the exact date your balance transfer period ends. Then, give yourself at least 1 months notice in order to search the market for a new credit card and have time to apply and transfer your balance once again. Whatever you do, don’t let the balance transfer period end while you still have the debt on that card, otherwise your 0 per cent could turn into 16 per cent APR overnight!
Both Robert Alan & Simon Duffy 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.
Robert Alan has sinced written about articles on various topics from Credit Cards, Business Credit Cards and Credit Cards. Robert Alan is an editor for and frequently contributing writer on various credit card-related topics. Find more free information,. Robert Alan's top article generates over 110000 views. to your Favourites.