0% APR credit cards are a very popular product with both individuals and businesses. The lure of being able to transfer balances to a zero percent annual percentage rate credit card and making most of the payment toward your principal (and not interest) is a win-win for millions of individuals who sign-up for 0 APR offers. While these balance transfer credit cards can be a great option, there are certain factors that merit closer scrutiny.
Consider the following tips:
There are different types of 0% APR cards
Under the broad umbrella of 0% APR credit card offers, there are several types of cards (based on the purpose for which they are used. Some broad categories include balance transfer, cash advances, business, and purchases. Generally, the introductory interest rate will be valid for either of these categories.
Read the terms to understand what 0% APR would apply for
If the credit card offers 0% APR on balance transfers up to twelve months, the introductory interest rate may not apply toward traditional retail purchases or cash advances. For this purpose, read the terms carefully to understand whether the rate is valid for your routine transactions. If your sole intention is to transfer your existing balances from a high APR card to one with a 0% APR, you are in luck. Transfer your balances to the low interest rate card and try to pay off as much of your principal as possible. At least your payments won’t go toward high interest rates.
Check on the duration of the offer
As the cliché goes: “All good things come to an end.” The proverbial wisdom applies to credit cards as well. Generally, most 0% APR offers will be valid for only a certain duration of time — ranging from six months to up to eighteen months. As soon as that timeframe expires, your interest rates could go up significantly. Be aware of the date when the offer expires. After this duration, you may have to pay regular interest rates. The ideal situation would be to pay off all your balances before the expiration of the introductory offer.
Lookout for transaction costs
Some offers may have transaction costs associated with the balance transfer. Whether or not the overall transaction may be to your advantage depends on how much debt you owe. If you owe more than a thousand dollars, the transaction fee may not impair the overall value of your bargain but you must be aware of its existence nevertheless. A simple Excel spreadsheet can help you calculate the overall effectiveness of the bargain.
If you are interested in comparing different 0% APR credit cards offers, click here. Detailed terms and conditions are provided as well.
Leave a Reply