A credit card offer with 0% interest is a tempting offer, especially for those of you who want to apply for a credit card to a bank. However, one thing you need to understand is whether the offer is right for you, even if you give 0% interest? The following article can be useful for you to reference before you apply for a credit card.
At present, there are several low interest credit cards that offer 0% introductory interest rates (APR). With the offer of a 0% intro APR, you don’t need to pay interest on purchases for a certain period of time. This depends on the credit card offer, the 0% intro APR can last from six months to more than a year.
What Are You Looking For?
When you are looking for a 0% APR credit card balance transfer offer, you need to look at the duration of the introductory period and the ongoing APR to anticipate if you cannot pay off the debt that you transferred before the promotional rate ends. Also make sure you really understand what is meant by the APR and other features such as the gift program. Also, make sure to calculate account balance transfer fees, which can range from 2% to 5% of the transfer amount. What you do above can help you find the 0% intro APR offer that is right for you to get out of debt.
How Does it Work?
You are advised to ask a lot before making a decision regarding credit cards at 0% interest. What is the agreement and can the facilities offered be true? Credit cards with 0% interest have already been implemented by many banks. No wonder you are tempted to take it. Indeed, a credit card with 0% interest can be an alternative source of financing if you are able to use it with responsibility.
Doesn’t Last Long
The interest rate is 0% only for the introductory period, because after that period the interest rate will rise and apply normally. A number of banks provide introductory interest rates of up to 24 months, but most banks provide a 0% APR between 6 and 12 months. This interest rate is charged for card purchases, while balance transfers are charged based on different cost schedules.
It is important to remember that you will never pay late on this credit card account during the introductory period. If there is a late payment, your 0% interest rate can be canceled early.
Still Makes Money
This is the business strategy applied by the banking world. Even though in practice, you are not charged interest on purchases, credit card issuers still make money from transaction costs that are charged to vendors, and often, from costs to you. Credit card issuers certainly hope you will continue to use the card. With a credit card, the bank will receive funds from the purchase transaction fee. At present, the bank understands that not a few credit card holders only use 0% interest. Once the introductory interest rate runs out, they will cancel their account.
If you look at a glance, the deferred interest financing with the 0% APR credit card offer looks very similar. However, if you look carefully, there is a striking difference between the two. That is, even if you pay a balance at the interest bid on the interest offer that is deferred before the 0% interest period expires, you remain obliged for all interest that is deferred until the opening of the account. This is because the deferred interest does not mean it is abolished but only postponed. So, you must be careful with suspended interest!
You are expected to be wise in using a credit card even without interest. Because your credit card from a credit card offer has a 0% interest, the best use is to make large purchases without interest.
One of the best uses of 0% interest credit card offers is to make large purchases without interest. And even then it can only work well when you are able to pay off the balance before the interest rate returns. When that happens, the interest rates may be very high. For that, you need to pay attention to interest rates after the introductory period and plan accordingly. When that happens, it may be very high, so know the interest rates after the delivery period and plan accordingly.
Advantages and Disadvantages
If you feel bored because you are wasting money to pay high credit card interest, then you can consider a 0% credit card. A credit card with 0% interest not only gives you an interest-free introductory period on purchases, but also offers 0% interest on limited-time balance transfers. Emily Starbuck Crone, a NerdWallet staff writer, at nerdwallet.com, mentioned there are some advantages and disadvantages of 0% interest credit card.
How can a credit card with a 0% interest benefit you:
• There is no interest for certain windows: You do not pay interest for purchases during the introductory period.
• Suitable for large purchases. If you make a large-scale purchase, but you need time to pay it off, you need to have a 0% interest card.
• Reduce high interest balance. If you have high-interest credit card debt, you can transfer it to a credit card that offers 0% introductory APR for balance transfers.
In addition to the benefits mentioned above, the 0% interest card also has several weaknesses that you should know.
• APRs will not last forever. Enjoy the APR while you can, because after the introductory period of 0% is complete, you will end up with 0% credit card interest. The 0% interest facility only takes place during the introductory period, and after that period ends, the credit card interest will return to the regular APR (the value is determined based on your credit worthiness).
• Balance transfers are not always included. Almost every 0% APR offer is for new purchases using a card. Some of these introductory offers also display 0% on balance transfers, but not all of them.
• You still have to pay a balance transfer fee. The amount is around 3% of the balance transferred. The problem is if you have a large balance, the transfer costs will be large too.
• You can lose the right to enjoy 0% interest because of bad behavior. If you make a late payment, the credit card issuer has the right to end the introductory period of 0%. If this happens, you not only have to pay regular interest but also get APR penalties of almost 30%.