Finance Choices
0% interest credit cards
What Are 0% APR Credit Cards?
Obviously, the best credit cards are the ones that charge the lowest interest and that do so for the longest period of time. Beware of credit cards that start out with high interest rates and that tie the interest rate to any economic indicator. These variable rate cards can cost you a different amount of interest every time the indicator changes.
Some credit cards start you off with a "teaser," a temporarily lower interest rate that can last for as little as 90 days or as long as a year. The teaser rate can actually be 0%! The trick of managing your finances with this type of credit card is to take advantage of the 0% by transfering other balances to that card and paying them off as quickly as you can.
How to find 0% APR Credit Cards
Finding 0% APR credit cards that offer no interest for more than 12 months is quite rate. You can, however, find one that will suit your needs if you look at the selection on our credit card review page.
0% Interest Credit Cards
Getting 0% Interest Rate Credit Cards
The advantage of getting 0% interest rate credit cards is simple; you can use the lender's money for free. There are, however, several things you should understand before you get 0% interest rate credit cards.
- Virtually all 0% interest rate credit cards offer no interest for a limited amount of time, usually 6-12 months.
- Some of these cards do not allow you to transfer balances from high-rate interest cards during the introductory 0% offer period.
- Some 0% interest rate credit cards charge very high balance transfer fees such as origination fees of £50.
- Some of these cards also carry very high penalties for late payments and automatically switch you to a variable APR rate for a late payment.
- Some 0% interest rate cards charge very high interest after the introductory period.
Responsible Use of 0% Interest Credit Cards
It is up to you to read all of the details about every card you are considering. Make sure you understand what the long-term costs will be. If you choose to get 0% interest rate credit cards in order to transfer balances from high-rate cards, make sure you pay as much of the balance transferfed as you can before the introductory period is over.Try not to get a new credit card to pay off an old one unless you can do so at an extremely low interest rate or 0% interest. Be careful not to transfer a large balance, such as £3,000, if you can't pay it off before the end of the introductory period. This could leave you paying a higher interest rate than the original one on the remaining balance. Be very careful to always know exactly what your credit cards will cost you.
posted by Barbara Gordon at 4:13 PM
0% interest credit cards
4 Comments:
A 0% credit card sounds to good to be true and to a large degree it is. However, it is possible to obtain a card that charges 0% interest for a limited time. The catch is that after a set period the introductory rate of 0% ends and the standard APR is charged. Any outstanding balance on purchases made, whether during the introductory period or not, now become subject to the standard rate.
The headline for a 0% on purchases offer always looks very inviting. However, it is very important that the consumer understands what the offer is all about. The 0% interest only applies for the length of the offer period. Some people confuse this with a lifetime interest of 0% on purchases made during the offer period. There is a subtle but hugely important difference. It means that to get the maximum benefit of the offer the consumer should make their purchases as early as possible. There is not much to be gained by making the purchase in the final days of the offer.
The typical length of the offer period is 6 months, although that can and does vary. It is rarely much less than 6 months and occasionally a credit card company will promote a 12 month period, although this is becoming increasingly rare.
As we mentioned above when the period completes the outstanding balance of the purchases made will revert to the standard rate of the card. The new rate does not necessarily apply to the whole balance, as there may be a balance transfer offer that still applies. The completion of the term is something that the cardholder should be very aware of. They should make provision to handle this outstanding balance in some way, by either paying it off, obtaining a consolidation loan or transferring the balance to another card.
Even when the offer period is current not all transactions are subject to the introductory rate. The obvious types of transactions that are exempt from the 0% rate are cash withdrawals and interest charges. Cash advances are normally charged at the standard rate plus a handling charge and we are not aware of any credit cards that charge 0% on cash advances.
In summary the benefits of a 0% credit card are very obvious. However, the dangers are less so and that is the point of this article. While the 0% rate apply then is sensible to take advantage of it. The key thing is to have a plan of action for when the 0% rate finishes. If you do then it is possible to use these offers to your advantage.
Credit card lenders are so keen to get your custom that there's now a number of 0% credit card offers to choose from and, as long as your credit rating is fairly good, it makes sense to take advantage of them.
This trend began a couple of years ago with introductory rates of 0% on balance transfers, but now there are plenty of cards around which charge no interest on new purchases, and some are even offering both.
If you have an outstanding balance you could benefit from moving your debt to a card with an introductory 0% rate for balance transfers.
If you want to use the card for purchases at the same time as transferring an old balance to it, then apply for a card that offers 0% for both balance transfers and new purchases.
As the introductory interest free period is for a limited time, ideally you want to apply for a card that offers a interest free period and a competitive ongoing standard rate.
hi, I had an idea and I havent thought it all the way through so feel free to punch holes in it, I see ads offering credit cards that have zero interest for 6 months if you transfer a balance. Before the 6 months have expired you can either negotiate another 6 mohts or transfer to another card that gives you 6 months. This is basically free money. I believe it is possible to conduct transactions with some online brokers using credit cards. If you kept aside enough to pay your monthly bill couldnt use that credit to purchase someting that generates interest? Like i said this may be totally unworkable..
Zero interest credit card balances generally do not include cash back
balances. If you take cash out of the credit card you will be charged differently than if you purchase a few TVs with the money. Of course you could just return the TVs for cash but I'm not sure they would pay you cash
for a $1,000 TV. Then again is all of this really worth the risk / return? What are you going to do, charge $20,000 in stuff, return it for cash, invest it in short term guaranteed investments and hope to make $100? My guess is the fees will eat you up.
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