There are credit cards available in the market that offer a 0% APR introductory period. Most credit cards offer 0% APR for the first 12 months for purchases and balance transfers, and this can mean some serious savings if you plan ahead. Thus try to go for this type of credit card when you decide to get one.
Advantages of 0% APR Credit Card
A 0% APR credit card allows you to make purchases for the first 12 months by paying only the minimum payment each month. This way you don’t have to worry about paying any interest or finance charges for 12 months.
If you have a responsible attitude towards your spending, then this type of card can be very cost efficient and can allow you to leverage your money if it needs to be used for other, more important things.
The biggest advantage of a 0% APR credit card is that it allows you to transfer balances from other high-interest-carrying credit cards or loans. This way you can pay off the entire balance on your 20% interest Best Buy card with your new 0% APR credit card, then slowly pay it down for 12 months with zero interest. It doesn’t make any sense to keep paying interest when there are no-cost alternatives available.
Universal Credit Default Rule
Although all this seems great but, there is one catch. It is important that you are a responsible borrower. This is because the creditor has the authority to cut your introductory period short, and shoot your interest rate up to 20% or higher, depending on the terms of the card-member agreement, if you’re late on any of your payments, on any one of your credit cards or other loans.
This is called the universal credit default rule. Although it might seem like a strict rule, it can be easily avoided if you’re responsible and manage your bills effectively.
Get Another Card
When the introductory 0% APR period of your credit card ends, you can execute a new credit card balance transfer to a new credit card, and extend that 0% interest rate for another 12 months. But remember that you still have to pay off whatever you spend. These credit cards simply offer more flexibility by helping you to avoid paying interest, which can result in savings of hundreds to thousands of dollars.
Balance Transfer Fee
Many credit cards charge a balance transfer fee, which is usually of $10 or 3% of the transaction, up to $75. And many balance transfer offers have a minimum transfer amount such as $100 or more.
Citi Card with 0% APR is a good option as it offers 0% APR for purchases and balance transfers for 12 months, with no annual fee and no balance transfer fee. American Express Clear is another great card with no fees of any kind. Such cards help you to remain debt free as the interest doesn’t accumulate to make a big amount.
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