How can companies offer credit cards with no interest and still make money? Well, they didn't so much before the interest rates went up. But you can still find cards with no APR if you look. The Internet is probably the best place to look. What's the catch then? There are a number:
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Most credit cards with no interest rate charge no interest for a limited time, usually no more than a year.
Read the fine print carefully to find out how much interest you'll have to pay. Some people try to transfer their entire credit card balance to a new zero APR card every year to keep their "limited time offer" going forever, but credit card companies are getting wise to this trick. Still, getting a credit card with no annual percentage rate (APR) can be a good idea as long as you read the contract and follow the rules.
- Most of the time, there is an annual fee.
$20 is no problem, but watch out for fees in the triple digits just to get 0% APR for a year.
- People who give out cards with 0% APR make money off of fools.
Don't be one, then. There are high late fees, so pay on time. What is the interest rate if the APR is 0% and the late fee is $25? You can figure it out for yourself. The card company could also raise the rate for people who pay late (they call it a "default interest rate"). And a default interest rate may be used not only for current balances but also for future payments.
Zero APR credit cards can be a great deal if you pay your bills on time and the interest rate isn't too high after the introductory period. If you do that, the people who get these cards and then don't pay them back on time will pay for your low interest rate.
