How To Get Advantage Associated With 0% APR Credit Cards

November 25th, 2011 | Posted in Debt Relief

You might be effected by the ever-increasing credit card debt but in such cases, you will find that the 0% APR credit card can do wonders for you. A number of 0% APR credit cards are present in the market these days. All these 0% interest credit cards are advantageous as the card holders pay 0 percent on all new purchases and with some 0% APR credit cards it is also possible to lower down the interest burden with balance transfer facility they offer.

The Truth About 0% APR Credit Cards
These types of 0% APR credit cards are offered by popular credit card lenders including American Express, Citibank, Chase, HSBC, and Discover. These cards have many benefits to offer if you have a good to excellent credit rating.

Keep in mind, that the zero percent offered with these cards is not permanent. Introductory rate is usually offered to expire either in 90 days or to the maximum in 12 months. As the interest-free or the 0 percent period ends, you, as a cardholder, will have to pay higher interest rates according to the market conditions and the policy of the bank. Generally, these rates could vary between 10% – 14% and sometimes can be as high as 24%.

A simple experience leads to the inference that 0% APR credit card is quite ideal for the situation when we want to buy very expensive item but we do not have the money instantly. You are not going to have the interest charges for the introductory period and you can easily pay back the expenses during that time. Despite, keep yourself informed about. Make sure you can pay the purchase off before the introductory APR expires.

On majority of time you will find that 0% interest credit cards allow all kinds of balance transfer from the higher interest cards and they also do not count transfer fees. This is certainly the best method to pay back all the debts at much faster rate and it will create a notable savings since the interest charges will be zero.
It is possible that a single credit card can have multiple APRs including the following.

1) First APR for all kind of balance transfers, second one for buying and third one for cash advances – the APR in case of the third one is certainly going to be higher as compared to the first and second one.

2) Tiered APRs – Different APR levels can be assigned for different account balance levels or tiers, eg, 15% for balances between $1 – $500 and 17% for balances higher than $500, etc.

3) Introductory APR – 0% APR for the introductory life span and much higher rates after expiration of 90 days or 12 months, which is the introductory period.

4) Penalty APR is the next one to follow and it applies when the card holder is late in paying off the debts.

The Traps To Watch Out For
A 0% APR credit card is an attractive proposition, and often is too tempting an offer to resist. It is important for you to know about all these untold catches that might come with these luring offers.

1. The 0% APR is a “Limited Time Offer” – In general, the 0% APR offered is only for a limited period. This period will certainly range somewhere in mid of 3 months and 12 months including the boundary value. This means that during this period you will not have to pay any interest as the interest rate is zero. You should make sure that you pay off all your debts during the introductory period or else you will have to pay hefty interest charges after that, which can be costly and sometimes unbearable.

2. After the introductory period finishes, the 0% APR credit card might force you to pay high interest rates such as 20% or even higher.

3. Your debts needs to be paid on time in some minimum amount each month, as required by these 0% interest credit cards conditions during the introductory period. Late payments will result in penalties that include shifting the remaining balance to a much higher APR.

4. Complete Payment – Certain 0% APR cards, for instance Home Depot card, require you to pay off the balance entirely before the expiration period of the introductory offer. In case you fail to pay off on time, you will then need to pay your remaining balance at higher interest rates. You need to understand all the terms related to the credit cards before acquiring them.

5. The next thing is the applicability of the 0% APR – Majority of the 0% interest cards offer 0% APR mostly on new purchases and in the case of balance transfers during the introductory period. There are some cards that offer 0% APR on balance transfer only in situations when you need to pay higher APR on each new purchase.

6. With some credit card companies it is clearly visible that they offer 0% APR, while at the same time they charge out high annual and balance transfer fees.

7. You might also find in some cases the cap or any kind of limit on the balance transfer amount. This means that the 0% APR will apply only for the amount within the cap limit and anything more will be charged the default higher APR.

Based on these facts, the luring credit card offers with 0% APR are certainly not good enough, and it may show as wrong if you get to acquire one of such cards. Prior to any consideration on acquiring 0% APR credit card, have a good look at some aspects like interest rates and credit balances, while making sure that you will be able to pay back the credit card debts (use credit card payoff calculator for this task). Read the terms and conditions carefully to avoid credit traps. Understanding about the fine print could lead to great savings apart from trouble free credit rating.