5 Things You Should Know About 0 APR Credit Card

April 25th, 2010 - 
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5 Things You Should Know About 0 APR Credit Card Offers

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If you have received one of these offers in the mail, you know how tempting they can be. They claim that you will pay no interest on any purchases or balance transfers in the first period of owning your card. But there are some things about these offers you need to know before you sign on the dotted line and let them pull your credit report

1.The 0 APR offer is for a limited time.

Most credit card companies that offer the 0 percent interest rate deal only offer it for a limited time. This means that you will pay 0 APR for six months, nine months, or up to a year. You need to check the fine print for this information and be careful to notice it when the time is up.

2.The 0 APR offer might not apply to everything you put on the card.

Many cards offer 0 APR on all balance transfers and any purchases made during the introductory 0 percent interest period. But some only offer the 0 APR on balance transfers, and you pay a very high interest rate on any purchases.

3.The 0 APR offer might be null and void if you are not on time with your payment.

Most of these credit card offers are contingent on your being an exemplary member. This means that you have to pay your minimum payment on time every month during the introductory period or else you automatically lose your nice 0 APR and move up to a rate that usually ranges from nineteen to twenty-one percent interest.

4.The 0 APR offer might carry a ridiculously high interest rate after the introductory period is over.

Again, the rate of interest for these cards after the 0 APR is over usually runs from nineteen to twenty-one percent.

5.The 0 APR credit card will not repair your credit.

Remember that consolidating your cards or transferring your loan balance will help you pay off the balance without interest, but it will not remove the damage already done to your credit.

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5 Pros of Owning a 0 APR Credit Card

April 19th, 2010 - 
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When you get the offer in the mail for a 0 APR credit card, you may be tempted to throw it out, thinking that it is too good to be true. But before you toss it in the circular file, take a good look at it. There are some distinct advantages to owning one of these 0 percent interest cards that could help you in ways you dont know yet.

1. Transfer high interest credit card balances.
If you have a credit card that you use often but cant seem to pay off, you can transfer the balance of this card to your new 0 APR card. If you are paying twenty percent interest on another card and have stopped using it because all you can afford to pay each month is the minimum balance, this is a great option for you. You can not only pay off your other balance, but you can also get your purchasing power back.

2. Consolidate all credit card debt to one card.
For people with several credit cards that are maxed out, consolidating them all onto one 0 APR card is the perfect way to pay down the debt quickly. Instead of your monthly payment going to the interest alone, you will be able to pay on the principle for the entire 0 APR introductory period.

3. Transfer high interest rate loan balances.
If you have a car loan that is at an exorbitant interest rate, this is your chance to pay off the loan with no interest. Pay it off at the bank with the 0 APR credit card and then make your interest free payments to the card to pay off this balance.

4. Make big ticket purchases with no interest financing.
Planning to buy some furniture or an appliance? Want to buy some plane tickets to Europe? Use your 0 APR credit card to finance the purchase of these items at 0 percent interest.

5. Improve your credit.
By paying your bill on time each month and paying off balances from other cards or loans, you improve your credit score and better your chances for getting future credit offers.

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5 Cons of Owning a 0 APR Credit Card

April 14th, 2010 - 
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If you have received an offer recently for a 0 APR credit card, you may have been very tempted to send in the form signed and ready to go. You may have seen the words 0 percent interest and jumped at the chance to shop for six months with impunity. You may even have thought that this was the answer to all your credit card or bank loan debt, allowing you to consolidate your bills and pay one low price with no interest. And all of these things may be true. However, there are some serious consequences that you need to know about before you blindly start spending with your new card.

1. Limited introductory period – Credit card companies who offer 0 APR cards cannot offer you this deal for very long or else they would not make any money off of you. So most deals last for six months, nine months, or even up to a year. This means that you will only pay 0 percent interest for this introductory period and no longer.

2. High interest rate – Very often, after the introductory period is over, the interest rate charged for use of your new credit card will be higher than the average rate. Usually, it is anywhere from nineteen to twenty-one percent interest, and perhaps a higher rate on cash advances and other transactions.

3. Penalty for late payments – If you pay your bill late or forget to pay it altogether anytime during the introductory period, you interest rate will immediately go up to a penalty rate. This could be as high as twenty to twenty-four percent on your entire balance.

4. Limited application of 0 APR – Some cards offer the 0 percent interest on all purchases made in the introductory period as well as on all balance transfers during this time. However, read the fine print because some only offer the 0 APR on balance transfers, and they charge a high rate on purchases.

5. Tricky conversion period – When it comes time to move from 0 APR to your regular interest rate, you may be charged interest on any unpaid balances from purchases during the introductory period.

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0% APR Credit Cards Can Save You Thousands

January 27th, 2010 - 
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Low interest credit cards are available as alternatives to those with middle-of-the-road to very high interest rates. If you have a credit card with a high interest rate anywhere from 17% to 24% or higher, then you may not realize that it is costing you hundreds and even thousands of dollars every year in interest alone. Once you understand your credit and how it is impacting your debt situation, you will see how low interest or even 0% APR credit cards can be a much better solution.

Gather Your Statements

Collect your statements for all high and low interest credit cards. Include Visa, MasterCard, American Express, Discover, department stores, retailers, grocers and any other revolving accounts. For each bill, make a record of the total balance, minimum payment amount and interest rate. You might also want to include your estimated monthly payment (if it’s more or less than the minimum) and the monthly finance charge.

Compare Cards

If you compare the numbers for each card, you will be able to see which ones are costing you the most money. The higher the APR and the higher the balance, the more you will end up paying in interest in the long run. And, if you only pay small amounts of what you owe, you can go on paying for over 20 years. Now you can see the benefit of having a low interest credit card.

Categorize Your Debt

Once you’ve figured out which are the low interest credit cards and which are high, you need to categorize them from highest to lowest. Then reorder them, if necessary, based on the estimated amount of interest you would pay for the entire year. In other words, if you have a high rate card with a low balance, the overall interest may be less than a low interest credit card with a very high balance. This step will help you to focus on the cards that are taking the most of your hard earned money.

Negotiate With Your Bank

Before you cut up your plastic or send it through the paper cutter, call you current credit card company. Many consumers don’t realize it, but companies would rather lower your interest rate than lose your business. Tell them that you’ve been offered a better deal on a low interest credit card. They may just match that offer, saving you the time and effort used to close and open a new card.

Shop Around For 0% APR Credit Cards

Some banks just won’t budge. You may have to do some digging to get a low interest credit card. Check online, talk to your local bank and sort through those direct mail offers. Ask your friends, family, co-workers and other acquaintances to learn about the cards they use.

Carefully Read the Fine Print

Many cards look too-good-to-be-true – 0% interest on transfers, lifetime low rate, frequent flyer miles, insurance benefits, etc. Often times, the offers are just that. 0% offers may only be applied to a limited amount or during a specific time frame. Fixed rates may increase if you so much as miss a single payment and so on. Pay close attention to all terms and policies, making sure to read the fine print. Don’t accept a low interest credit card until you are sure you understand all that is involved.

Maintain Good Credit

Now you can stop throwing money down the drain. Treasure your low interest or 0% APR credit card and maintain your good credit rating. Pay more than the minimum amounts and don’t get behind. Just as fast as you were able to lower your APR, it could jump up to astounding numbers.

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0% APR Credit Cards: The High Interest Rate Solution

December 20th, 2009 - 
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Over the past two years, the Federal Reserve has raised interest rates substantially. Consequently, credit card annual percentage rates have followed suit. Nearly all credit cards tie their interest rates to the prime rate, which has doubled to 8% from 4% during the string of rate hikes that began in 2004. This has led to interest rates on credit cards rising by 30% or more. Since August of 2006, the Federal Reserve has kept interest rates steady, and many economists believe the next move may be a reduction in rates. However, the rate reductions have yet to begin, and credit card interest rates remain relatively high.

For those who carry balances on their credit cards, high interest rates have resulted in higher monthly bills, with many seeing their minimum payment increase substantially. Fortunately, now, more than in recent years, 0% credit cards offer a safe harbor from high rates. There are two basic types of 0% credit cards: those that offer a 0% rate on balance transfers, and those that offer a 0% on purchases. The best credit cards offer 0% interest on both. How much savings can these credit cards provide? Lets take a look at the math.

Lets assume youre carrying a balance of $10,000. If you simply pay the minimum each month, you will accrue close to $2000 in interest over the course of a year, thanks to daily compounding balances (too bad savings accounts dont pay that type of interest). With a 0% balance transfer, you can expect to save all of that money, plus, youll be given time to pay down that debt. When the 0% period expires, not only is there a chance your interest rate will be lower, but, if rates do not go down, you can always transfer the balance to another 0% credit card. Plus, if you make a minimum payment of $150 a month, your balance at the end of the year will be closer to $8200, rather than $12,000. Thats quite a difference.

Now, if youre fortunate enough to have no credit card debt, a 0% interest rate can be handy tool to avoid interest expenses on new purchases and free up some cash in the short term. Need a new fridge? Have to fix your car? Want granite counters for the kitchen? With a 0% credit card, you can defer the cost of these expenses for a year while taking advantage of high interest rates. How? By placing the cash that would have left your bank account into a high-yield savings account and taking advantage of rewards credit cards.

Lets assume you will make $10,000 of purchases over the next few months. Using a credit card with a 0% interest rate and 1% cashback rewards, coupled with a high-yield savings account with a 4% interest rate can put about $500 extra in your pocket over the course of the year.

Of course, not everyone pays their balance in full each month. With average credit card interest rates in the 12% to 15% range, carrying a monthly balance of only $1000 can cost close to $150 a year. Saving $150 in interest charges may not be a fortune, but its surely enough to buy a nice dinner with a good bottle of wine.

No matter how you use your credit card, a 0% interest credit card can have a positive effect on both short and long term cash flows. Given that the alternative is paying more than 12% in interest, choosing a 0% credit card in this atmosphere of high interest rates is a no-brainer.

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0% Apr Credit Cards: A Smart Way To Save

December 10th, 2009 - 
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With the plethora of credit card options available today, you can use plastic to pay off debt and save money. Using a credit card to get rid of debt, rather than rack it up, may sound strange. But it is possible with 0% APR credit cards. All of the major credit card companies offer 0% APR credit cards. They are a great way to save hundreds, even thousands, of dollars on interest. If you use them wisely, 0% APR credit cards will help you get one step ahead in the credit card world.

What 0% APR Credit Cards Are

APR stands for the annual percentage rate on your credit card. When credit card companies advertise 0% APR, they are giving you the chance to carry a balance on your card and not pay interest on it. The timeframe for this 0% APR is usually between six months and a year.

Some credit cards only include 0% APR on new purchases. Others offer the 0% interest rate for purchases and balance transfers. With the balance transfer option, you can shift the amount that you owe on a card with a high interest rate to the 0% APR credit card. If you pay off the balance within the introductory period, you will avoid paying high fees in interest.

The savings youll receive from a 0% APR credit card can add up fast. Lets say you carry a balance of $2,000 on a credit card for a full year. If the interest rate is 20%, you will have to pay $400 in interest. This would not be the case with a 0% APR credit card. If the 0% introductory period is twelve months, you will avoid paying $400 in interest. Thats a significant savings!

Read the Fine Print

While 0% APR credit cards offer a great way to pay off debts and save on interest, it is important to understand the details involved. Some companies issue the introductory period based on your credit score. If you have good to excellent credit, you will receive a longer introductory period than if you do not have outstanding credit. Keep in mind, however, that there will still be an end to the introductory period.

This is why it is also essential to look into the go to rate. This refers to the APR that will go into effect after the 0% APR introductory offer. This go to rate is often higher than other credit card offers. If you check into this before applying for a 0% APR credit card, you will know what is in store for you after the initial grace period.

There are sometimes additional fees involved with 0% APR credit cards. They may charge a certain amount to transfer balances on to the card. Also, the interest rate may be raised if you miss a payment. Some 0% APR credit cards are only available to those with good credit. If you have poor credit, you may be better off with a different credit card.

If you want to pay off some debt or make a large purchase, it is time to look into a 0% APR credit card. You can use the introductory period to pay off balances. Then take the money youll save on interest expense and use it for other purchases. Apply today for a 0% APR credit card and start saving.

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