Are 0 Interest Credit Cards Reality Or Myth?

May 26th, 2010 - 
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If you are looking at owning a new credit card then obviously 0 interest credit cards hold a lot of appeal for you. Anything with 0 interest does grab attention, for that matter! But in the name of 0 interest credit cards, there is a lot of subtle dodging that credit card companies are playing with,to ensure you catch the bait. The question is will you?

Admit it. You are hooked on the 0 APR credit card ad that you just saw in the morning newspaper,and your interest is piqued. Are these 0 interest credit cards a reality or are they just a myth?

The truth is, they are and they are not! They are for real because there are cards that live up to the promise to a certain degree, but the truth is also that this 0% interest does not last long. It might just be an initial gimmick to get you to apply and once youre a cardholder, you will only have the 0 APR credit card for just a short time (3 months, 6 months, or if youre very lucky 12 months) before they start charging you a higher rate of interest. Truly, this credit card game is an interesting one to watch, if you are the suffering player. Read on to know what you can do to make sure you are not the sufferer.

Understanding 0 APR Credit Cards

Admittedly, 0 APR credit cards hold a lot of enticement. But heres what youve got to do when you find that a 0 APR card that has piqued your attention. Pay attention to how long the no-interest period will last, whether you can transfer other balances at the 0% rate, and, most important of all of these, what the APR rate will be when the offer ends! When you are done assessing these parameters you can properly finalize from the card options available.

The Luxuries of Owning a 0 APR Credit Card

If youve already accumulated a huge debt on your previous credit cards, theres good news for you. A 0 APR credit card is known to benefit users with large outstanding card balances in a big way. Not only are these users able to cut down the amount of interest incurred upon their debt, but with the help of a 0 APR credit card they can also gain access to competitively priced cash advances, which can help consolidate outstanding high APR debt. There are fees and APR’s attached to these cash advances, however.

Pitfalls of 0 Interest Credit Cards

*Most (in fact all) 0 interest credit cards offer 0% interest or no interest only for a limited amount of time, which varies between 6 to 12 months.

*If youre thinking of transferring balances from high interest credit cards, some of these cards might not even allow you to do so during the introductory 0% offer period.

*Certain 0 APR credit cards might also charge expensive balance transfer fees.

*Some of these 0 interest credit cards also carry very high penalties for late payments and automatically switch you to a variable APR rate for a late payment.

*Certain 0 APR credit cards charge a very high interest rate after the introductory (read honeymoon) period expires.

Yes, the picture is definitely not all rosy, even though you can undoubtedly save money through the use of some 0 interest credit cards, not using them judiciously can be an expensive proposition. So choose and use them wisely.

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Are 0% Apr Credit Cards A Magic Debt Solution?

May 21st, 2010 - 
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0% APR credit cards are becoming extremely common in the world today, thanks to a growing problem with credit card debt and a growing awareness on the part of banks and credit card companies that people want to find a way out of their financial trouble. And 0 interest credit cards at first seem like an ideal way out. Imagine, no additional finance charges accumulating while paying down your existing balances… It’s almost too good to be true! And it is almost like magic–in the sense that magic is often an illusion.

This isn’t to imply that the credit card companies are being deceptive when offering 0% APR credit cards, because they aren’t. Their exact pricing policies are right there on the application pages to any 0% APR credit card, though many people just see the big zero and coast on through the application. But before making any financial agreement, especially an agreement to enter into what amounts to a borrower/lender agreement with a bank or corporation, it pays to stop and take a closer look at exactly what you’re agreeing to.

First of all, there’s the well-established fact that 0% APR is always an introductory rate, lasting anywhere from six to twelve months. Since the major way a credit card company makes money is through interest rates, it wouldn’t make much sense for the company to do anything else. At some point, they will have to charge you interest, even on a 0% APR credit card, which is no problem, as long as you know how much interest you’re getting, right?

But it’s still important to look deeper. Many credit card companies charge extremely high interest rates–18% and up–on even 0 interest credit cards, once the introductory period has expired. Often, there are variable interest rates to justify this: a fairly low rate (maybe 11% to 14%) for cardholders with the best credit rating, a medium rate (17% to 19%) for cardholders with still okay credit, and a standard rate (as high, in many cases, as 23%) for cardholders with average credit. Still higher is the default rate, which you enter if the credit card company decides, for whatever reason, that you’ve been making too many late payments or that you’ve become a bad credit risk. At this point, your interest rate shoots up to as many as twenty-four percentage points above the prime rate (8% as of June, 2006), leading to a default rate of a massive 32%.

So imagine this scenario. You’ve gotten into some difficulty with credit balances and you’re looking for a way to stabilize your finances before paying everything off. Say you’ve got $1,000 in your existing balances across several cards. You apply for a 0% APR card with a balance transfer option and consolidate all of your debt on the existing card (assuming there’s no fee for balance transfers.) So now you have a 0 interest credit card with twelve months to pay it off. For whatever reason, your expected financial windfalls don’t come through, or required purchases offset your balance payments and your balance remains constant at $1,000 after a year. Because you’ve got average credit, your APR starts at 22%, adding $220 to your balances the first month, and more thereafter. You miss some payments, bringing your APR up to almost 33%. At this point, a full third of your balances are being added on to your debts every month, and you may start looking around for still more 0% APR credit cards for salvation

With some sound financial prudence and a determination to pay off your balances within the introductory period, 0% APR credit cards can be valuable resource for getting out of debt. But make sure, when you’re trying to get out of debt, that you know what agreement you’re getting into first.

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0 APR Credit Card Truths and Traps

March 20th, 2010 - 
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If you are struggling with ever-increasing credit card debt, a 0 APR credit card could be the magic wand for you. There are a number of 0 APR credit cards in the marketplace. These 0 Interest credit cards offer cardholders zero percent on new purchases and certain 0 APR credit card offers also allow balance transfers, lowering the interest burden even further.

The Truth About 0 APR Credit Cards

These types of 0 APR credit cards are offered by popular credit card lenders including American Express, Citibank, Chase, HSBC, and Discover. These cards have many benefits to offer if you have a good to excellent credit rating.

Keep in mind, that the zero percent offered with these cards is not permanent. It is an introductory rate and is typically offered for ninety days to as long as 12 months. At the end of the interest-free or zero percent periods, cardholders will have to pay a higher ongoing interest rate. Generally, these rates could vary between 10 % – 14% and sometimes can be as high as 24%.

A 0 APR credit card is ideal when you want to purchase something expensive but cannot find another way to finance it. There will be no interest charges for the in and you will have the introductory buffer period to pay off the expense. But buyer beware … make sure you can pay the purchase off before the introductory APR expires.

Most 0 Interest credit cards allow balance transfers from your existing higher interest cards and many will waive the transfer fees. This is one of the best methods to pay off debts at a faster rate, leading to substantial savings on the interest charges incurred.

It is possible that a single credit card can have multiple APRs including the following:
1) One APR for balance transfers, one for purchases, and one for cash advances the APR normally would be higher for cash advances compared to balance transfers and purchases.
2) Tiered APRs Different APR levels can be assigned for different account balance levels or tiers, e.g., 15% for balances between $1 – $500 and 17% for balances higher than $500, etc..
3) Introductory APR 0 APR as the introductory offer and a higher rate upon expiration of the introductory period.
4) Penalty APR A penalty APR rate may apply if you are late with your payments.

The Traps to Watch Out For:
A 0 APR credit card is an attractive proposition, and often is too tempting an offer to resist. However, it is essential to be informed about the often-untold catches in these lucrative offers.

1. The 0 APR is a Limited Time Offer In general, the 0 APR offered is only for a limited period. The period could vary from 3 months to 12 months. This implies that purchases made during this period will not attract any interest. You need to be cautious about the expiry period and remember to pay off before the period ends inorder to avoid hefty interest charges.

2. Once the introductory period is over, the 0 APR credit card may have a ridiculously high interest rate like 20% or higher.

3. On-Time Payment Most of these 0 Interest credit cards require you to pay the minimum payment on time every month during the introductory period. Late payments will result in penalties that include shifting the remaining balance to a much higher APR.

4. Complete Payment Certain 0 APR cards require you to pay off the balance entirely before the expiration period of the introductory offer. If not, the default high interest rate could be applied to the entire balance. Ensure that you understand these credit card terms clearly.

5. Applicability of the 0 APR Most of the 0 Interest cards offer the 0 APR on new purchases and balance transfers in the introductory period. However, there are some cards that offer 0 APR on balance transfers only with higher applicable APR’s on new purchases.

6. Other Fees Some credit card companies compensate the 0 APR by charging high annual fees or transfer fees on balance transfers.

7. Cap on Balance Transfer Certain cards may have a cap or limit on the balance transfer amount. This means that the 0 APR will apply only for the amount within the cap limit and anything more will be charged the default higher APR.

While it may be an attractive offer to go for 0 APR credit cards, it may not be a wise decision in certain scenarios. So, before you seriously consider a 0 APR credit card, it is essential to compute credit balances, interest rates, and your pay off capability. Read the terms and conditions carefully to avoid credit traps. Understanding the fine print could have substantial savings apart from trouble free credit rating.

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0% Interest Credit Cards – Truth or Fiction?

March 9th, 2010 - 
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If you are looking for a new credit card then obviously 0% interest credit cards hold a lot of appeal for you. Anything at 0% interest nowadays grabs everyone’s attention, for that matter! But as far as these 0% interest credit card offers go, there is a lot of subtle dodging that credit card companies and bank card issuers engage in to ensure you catch the bait.

So just go ahead and admit it. You are hooked. The 0% APR credit cards ad that you just saw in the brochure attached in the morning newspaper has piqued your interest. But seriously … are these 0% interest credit cards for real?

The truth is they are and they are not. There are cards that live up to the promise of a 0% APR credit card, but the truth is that this 0% interest does not last long. It might just be an initial gimmick to get you to subscribe to the card offer and once youre a cardholder, you have the 0% APR for just a limited time (3 months, 6 months, or if youre very lucky 12 months) before they start charging you a higher rate of interest. The credit card game is truly an interesting one to watch, but not if you are the suffering player. Read on to know what you can do to make sure you are not the sufferer.

Understanding 0% APR Credit Cards

Yes, 0% APR credit cards do, in fact, hold a lot of enticement. But here is what you must do when you find a 0% APR card that has gotten your attention. Pay attention to the following:

1) How long the no-interest period will last?
2) Can you transfer other balances at the 0% rate?
3) What will the APR be after the introductory period ends?

When you are done assessing these factors, you can properly compare all of the interest credit card options available.

The Luxuries of Owning a 0% APR Credit Card

If youve already accumulated a huge debt on your previous credit cards, theres good news for you. A 0% APR credit card can benefit consumers bad credit histories in a big way, if (and that’s a big if) they can get approved for the card offer itself. That being said, a 0% APR credit offer allows cardholders to drastically cut down the interest being incurred on existing debt while it can also help consolidate debts on other outstanding high APR card balances. There are typically balance transfer fees associated with this type of consolidation, but if your credit is sufficient enough, you might be able to avoid fees altogether.

Pitfalls of 0 Interest Credit Cards

1) Most 0% interest credit cards offer 0% interest or no interest only for a limited amount of time, which varies between 6 to 12 months.

2) If youre thinking of transferring balances from high interest credit cards, some of these cards might not even allow you to do so during the introductory 0% offer period.

3) Some 0% interest credit cards might also charge very high balance transfer fees.

4) Some of these cards also carry very high penalties for late payments and
automatically switch you to a much higher variable APR after incurring even a single late payment.

5) Some 0% APR credit cards charge a very high interest rate after the introductory (read honeymoon) period.

Yes, the picture is definitely not all rosy, even though you can most definitely save money on interest charges by using 0% interest credit cards judiciously. If cardholders fail to pay off their card balances prior to the introductory offer expiration, if they fail to make payments on time, or generally disregard their credit responsibilities, these credit cards can end up costing consumers significantly more than most will anticipate.

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0% Credit Cards: Are They The Real Deal?

February 28th, 2010 - 
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Whenever I hear the number 0%, I hope that it refers to the interest rate I have to pay and not the interest rate that I have to earn. There are many different credit card offers out there, and of course when you see the 0% it seems like it would be the best option. But, when you sit and think about it you might wonder why one credit card would be 0% and the other would be 26%, what’s the catch?

It is not that the issuer is out to scam you. But you still need to look close. You never know what you are in for unless you read all the terms and conditions associated with the card.

0% Doesn’t Mean 0% Across the Board

While there are some legit 0% credit cards out there you need to look at the fine print before you simply assume that you can buy everything with no interest. The 0% is not a blank check that you cash anywhere. If applies to some types of transactions. This isn’t to say that you shouldn’t take advantage; you just need to be an aware consumer and make sure that you know how the 0% works.

If you have some credit card balances that you would like to transfer than you may want to look for a 0% credit card. There are many credit cards out there that offer 0% balance transfers. The more the transfer, the higher the saving. Many people use these cards to do away with those high interest credit cards so that they can actually start making a dent in the amount of money that they owe instead of just paying off the interest each month.

Many 0% credit cards have 0% interest rate offers on specified purchases. These may be purchases at specific stores or for specific products, but depending on what you purchase these credit card offers really can save you a lot of money. You’ll need to be sure to read all of the fine print on these cards to be sure that it is something that will save you as much money as you would hope.

Then there are the cards that use 0% as the way to ensnare you. Often times this 0% is good for the first six months or a year that you have a card. This is a nice way to consolidate debt, make big purchases, pay for car or house repairs, or just buy things that you have been putting off because you didn’t want to pay interest. One more interesting dimension of credit cards relates to rewards and cash back.

Before you choose any one of the 0% credit cards that you come across you should read through all of the features. The prudent buyer wants to know the interest rate, not just on day one but also on later days. Do you need to pay off all of the items that you bought during the 0% time? Whether you make money or lose money will depend on how smartly you use the card.

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0% Apr Credit Cards You Can Find

February 11th, 2010 - 
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When it comes to 0% APR credit cards, you may be wondering how you can take full advantage of these offers. There are many f them out there, actually. The ability to offer this service is usually something of a ploy though. To get you into their card products, card issuers may offer 0% APR abilities as an introductory. Yet, even if this is only an introductory offer, you can still find these benefits to be rather rewarding. If you take a few minute to consider what is out there, you may see that you qualify and can benefit from these 0 interest credit cards.

What Are They?

The first thing for you to do is to understand what 0% APR credit cards actually are. Having this card will allow you to use credit without any interest accumulating on the amount that you have borrowed. Any fees including annual fees will still apply, but this amount of money is not something that you have to worry about having a 25% interest rate charge on top of, at least, not at first.

The 0% APR credit card is offered strictly as an introductory rate. It is never offered for the life of the card or even for an extended amount of time beyond say, 12 months. You will most certainly have this 0% interest for just a limited time. Sometimes it is just a few months, other times it can be as long 15 months for some of the longer, extended introductory APR offers. The goal that you should have is to take full advantage of this offer within the timeframe of the introductory offer and consider how it can benefit you.

Your Benefits

First off, you should look very closely at the particulars of each 0% APR credit cards offer that you are considering. Ask yourself the following questions:

* How long does the card offer keep this introductory rate?

* What is the ongoing APR after that introductory period is over?

* Is this an APR that you can live with, especially if you are a cardholder that tends to carry large card balances?

* Are there other fees that you should take into consideration, such as an annual fee?

* How well does this compare to your current credit cards?

* How well does it compare overall to the other offers you are considering?

Since all credit card offers are a bit different, make sure you read the details before you just accept any offer out there.

Your benefits come in when you can take what is being offered to you, in this case a 0% APR credit card, and use it to your advantage to save money, and in some instances, a lot of money. Lets say that you currently have a credit card that you have a 25% APR on, which is considered anything but cheap. Now, you are looking to find a way to lower the amount but the lender wont offer a drop in the APR (you should always call and ask for your current lender to lower your APR!) One thing that you should also do is determine if your 0% APR credit card offer applies to purchase, balance transfers or both. If the introductory rate only applies to balance transfers, you should move your outstanding balances to the new account, and ultimately pay it off before the introductory period ends. If the introductory APR applies only to new purchases, you should use this new card
strictly for all new purchases while continuing to pay down the balances on your higher APR cards. And if the 0% introductory APR applies to both purchases and balance transfers, you should centralize all of your card activity around this card for the entirety of the introductory period.

The key to any of these credit card strategies is an aggressive card balance repayment plan that minimizes the compounding effect of high APR finance charges. If you let your card balances continue to roll over, you are likely to end up paying just as much, if not much more, on the credit card anyway. Yet, those six months or more of no interest can be a true blessing to those that pay down their balances aggressively within the timeframe of 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 Card Benefits

November 24th, 2009 - 
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You will see many lenders these days offering 0% APR credit cards. If you are thinking of applying for a 0% APR credit card, it is well worth taking the time to research and compare all the offers and benefits available. Although many company’s offer 0% interest credit cards, in most cases it is for an introductory period only. You should take the time to compare the agreements and conditions carefully, as these vary considerably from lender to lender. It’s also important that you take into consideration the permanent rates that the lender charges. While 0% interest credit cards may look tempting, it’s no use entering into an agreement if you struggle to make payments because the permanent rate is too high.

The benefits of a 0% APR credit card may seem obvious, you don’t pay any interest! But many of the 0% interest cards also offer other benefits. Some come with reward schemes like rebates, others with cash back offers. The reward scheme applies to your purchases, where the lender may give you a percentage of cash back for every dollar you spend. They may also have a reward scheme where you can accumulate points depending on how much you spend. These points can then be exchanged for merchandise which the companies offer to their customers. While the points on offer are strictly in favor of the card company, you can still save on the retail purchase price of these goods, which is a benefit.

If you are currently paying interest on your current card or cards, why not think about changing to a 0% APR credit card? If you have a few cards the monthly payments can soon become a considerable sum. You can save yourself money by changing to one of the 0% interest cards. Just think, instead of paying out maybe $100 or so a month in interest, you could be paying out a lot less while reducing the amount you owe.

Most banks or credit card companies will allow you to transfer the outstanding balance you have on your current card to one of their 0% interest credit cards. That means you could consolidate all your outstanding balances on your current cards by transferring them to your new 0% APR credit cards. Some lenders may have a limit on the total money you are allowed to transfer. It’s important that you read the terms of the offer and understand them fully before committing yourself to an agreement. You don’t want to be penalized by any fees you may have to pay if transferring a balance.

The new lender you have transferred your balance to, may have a time limit on their 0% interest credit cards. If you want to keep your payments low, or keep reducing your balance then you should think about changing your card or transferring the balance before the 0% APR credit cards offer runs out. It is worth checking your agreement at this stage just to make sure you will not incur a fee for transferring your balance to another card.

If you’ve done your homework and chosen the correct card in the first place, this shouldn’t be a problem. You should start to look for your new 0% APR credit cards, or card, a month or so before your offer terminates. This will give you time to apply and be able to transfer your balance as soon as your 0% interest credit cards offer ends.

There is an important fact about a 0% APR credit card that most people overlook. Most agreements state you must make ALL your 0% APR credit card payments on time. If you make a late payment on your 0% interest credit cards then the offer becomes invalid immediately.

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