The competition from credit card companies is at an all-time high. Credit card companies want your business and most are willing to wave fees and interest just to get you to sign up for their card. With these types of offers you can step in and take advantage to save money.
0% introductory APR is a great way to pay down existing credit card balances, or even to use as short term financing for buying holiday gifts or even a vacation. A true 0% APR should allow you to make purchases and carry a balance on your account each month during the introductory period without incurring interest or finance charges.
It is very important to avoid the “catches” that credit card companies often associate with 0% introductory purchase APR. Here are the tricky clauses you should carefully monitor.
Balance Transfers Only
0% introductory APR can mean many different things; however, in order to protect yourself from incurring unwanted finance charges, look carefully at the terms of the introductory interest rate. It could be that the credit card issuer agrees to charge no interest at all for all new purchases and any balance transfers into your new account for the limited introductory period. Or it could mean that you qualify for 0% interest on only balance transfers. This clause would allow you to transfer an existing credit card balance and incur no finance charges month to month during the introductory period, but any new purchases you make will be charged a finance fee each month.
Transfer Fee
Many credit card companies who offer 0% intro APR may actually charge you a fee for transferring a credit card balance. The transfer fee is a percentage of the balance, usually around 3%, with a maximum of $50 up to $75. The transfer fees may wipe out any potential savings you intended to make on the introductory offer. In order to take advantage of 0% introductory APR, make sure you do not have to pay a transfer fee.
High Annual Fees
Credit card companies may entice you with 0% introductory offers only to charge you high annual fees. The fees could range anywhere from $20 to $75 and higher. Be careful to avoid 0% APR offers with annual fees.
Cash Advances
Many people enjoy the convenience of cash advances with their credit card. However, know before you make a cash advance on your new 0% intro APR credit card whether finance charges apply or not. Usually 0% APR does not apply to cash advances.
Minimum Purchase Required
Often you may find that a credit card company expects you to make a minimum purchase on your new card each month in order to keep the 0% introductory APR. Beware! You should not be required to make minimum purchases in order to reap the benefits of an introductory offer.
What Is the Permanent Interest Rate?
And finally, always look carefully at what the permanent interest rate will be after the introductory period expires. You could find that you’ll end up with a high interest rate of 20% or more. Read the terms carefully before you apply for the 0% introductory APR and make sure that the permanent interest rate will be a reasonable one.
Write to Grace Carter at grace@creditdonkey.com
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