It's interesting to see how something that started out as a marketing gimmick has turned into a nearly permanent part of the American credit card industry. Today, 0% APR credit cards can help a person get out of debt or pay it down in a big way.
What is a credit card with a 0% APR?
The annual interest rate is called the Annual Percentage Rate, or APR, in the business world. It shows how much it costs to borrow money. In the past, everyone paid the same APR based on...
It's interesting to see how something that started out as a marketing gimmick has turned into a nearly permanent part of the American credit card industry. Today, 0% APR credit cards can help a person get out of debt or pay it down in a big way.
What is a credit card with a 0% APR?
The annual interest rate is called the Annual Percentage Rate, or APR, in the business world. It shows how much it costs to borrow money. In the past, everyone paid the same APR, which was based on bank rates. It was about 18% most of the time. With the rise of the single-line bank came the use of low APR. These were banks that only gave out credit cards. They did not accept deposits or give out regular loans. For these early bankers and credit card companies to be successful, they needed a lot of customers, so they used low APR teaser rates to get as many new cardholders as possible.
The trick seemed to work so well that it's hard to find a credit card company today that doesn't offer an incentive APR for the first six months or year. For the first year, the most popular credit cards have an APR of 0%.
How a credit card with 0% APR can help you pay off debt
A credit card with 0% APR can be very helpful for someone who wants to pay off a lot of credit card debt. For example, if you still owe about $10,000 on your credit card and the APR is 20%, you will pay a whopping $2,000 just in interest payments. With a credit card that has a 0% APR, all of the $2,000 could go toward paying off that huge debt. So, it's clear that 0 percent APR credit cards can give people with a lot of credit card debt the financial breathing room they need.
Credit cards with 0% APR must be consolidated or transferred to be useful.
Before a person with a lot of credit card debt can enjoy the benefits of a 0% APR credit card, they will need to take important first steps like transferring a credit card debt or consolidating credit card debt. The goal would be for all of the person's outstanding credit card debt to be paid to one credit card company at 0% APR.
You can't say enough about how important 0% APR credit cards are for getting out of credit card debt, whether you're an individual or a business.
Many people who are interested in getting a credit card put a lot of stock in being able to get one with 0% APR, but the truth is that it is only appealing and helpful to two groups of people. First, people who can pay off their credit card balances every month and for whom an APR of 0% means that the cost of keeping a credit card is very low. Second, people who are in debt also benefit because the 0% APR credit card makes it much easier for them to pay down their debt.
