If you have a lot of credit card debt that keeps getting bigger, a credit card with 0% APR could be the answer. There are several credit cards out there with 0% APR. These 0% APR credit cards don't charge interest on new purchases, and some of them also let you transfer a balance, which lowers your interest costs even more.
The Truth About Credit Cards With No Interest
Credit card companies like American Express, Citibank, Chase, HSBC, and Discover all offer these types of credit cards with 0% APR. If your credit score is good to excellent, you can get a lot out of these cards.
Keep in mind that the 0% APR that comes with these cards won't last forever. It is an introductory rate, and most people can get it for 90 days or up to a year. When the interest-free or 0% periods are over, cardholders will have to pay a higher interest rate going forward. In general, these rates could be anywhere from 10% to 14%, and sometimes they could be as high as 24 %.
When you want to buy something expensive but can't find another way to pay for it, a credit card with 0% APR is a good choice. You won't have to pay interest on the in, and you'll have the introductory period to pay off the cost. But buyer beware: make sure you can pay off the purchase before the introductory APR ends.
Most credit cards with 0% interest will let you transfer balances from cards with higher interest rates, and many of them will even pay the transfer fees. This is one of the best ways to pay off debts faster, which will save you a lot of money on interest charges.
It is possible for a single credit card to have more than one APR, such as:
1) Balance transfers have one APR, purchases have another, and cash advances have a third. The APR would usually be higher for cash advances than it would be for purchases or balance transfers.
2) Variable APRs Different APR levels can be set for different account balance levels or "tiers," such as 15% for balances between $1 and $500 and 17% for balances over $500, etc.
3) Introductory APR: An introductory offer of 0% APR, followed by a higher rate after the introductory period.
4) Charged APR If you are late with your payments, you may have to pay a higher APR rate.
Watch out for these pitfalls: A credit card with 0% APR sounds great and is often too tempting to pass up. But it's important to know about the things that aren't always clear about these good deals.
1. The 0% APR is only available for a short time. In general, the 0% APR is only available for a short time. The time frame could be anywhere from three to twelve months. This means that there will be no interest on purchases made during this time. To avoid paying a lot of interest, you need to watch out for the expiration date and make sure to pay off the loan before the period ends.
2. Once the introductory period is over, the 0 APR credit card may have an interest rate that is ridiculously high, like 20% or more.
3. Payment on time During the introductory period, most of these credit cards with no interest charge require you to make the minimum payment on time every month. If you don't pay on time, you'll have to pay penalties, like moving the remaining balance to a much higher APR.
4. Complete Payment Certain cards with 0% APR require you to pay off the whole balance before the introductory offer ends. If you don't, the whole balance could be charged the default high interest rate. Make sure you understand all of these credit card terms.
5. Can the 0% APR be used? In the beginning, most cards with 0% APR offer 0% APR on both new purchases and balance transfers. But there are some cards that only offer 0% APR on balance transfers, and the APR on new purchases is higher.
6. Additional Fees Some credit card companies make up for the 0% APR by charging high annual fees or fees for transferring balances.
7. Limits on transferring balances There may be a limit on how much you can transfer from one card to another. This means that the 0 APR will only apply to the amount up to the cap limit, and anything over that will be charged the higher APR that is set by default.
Even though 0 APR credit cards may seem like a good deal, they may not be the best choice in some situations. So, before you really think about getting a credit card with 0% APR, you need to figure out your credit balances, interest rates, and how quickly you can pay them off. Carefully read the terms and conditions to avoid getting stuck in a credit trap. Besides keeping your credit score clean, reading the fine print could save you a lot of money.
