Are 0 APR Cards a Good Idea?
June 29th, 2009, Written By: Kerri Randall
You’ve seen it in your mail: You’re pre-approved for our card with 0 APR for the first six months! Sounds great, doesn’t it? Charge whatever you want, and make no interest payments on it during the first six months, or year, or whatever that credit card’s time limit is. But is it too good to be true?
Not necessarily. 0 APR cards can be extremely beneficial; you just have to be aware of all the fine print. For example, take a look at what the normal interest rate on that card is. If it’s outrageously high, you might want to avoid their tempting introductory period offer. If you have a balance left on your card after that time, interest will start to accrue at their normal rate, and in some cases, you might be charged all of the interest you would have been paying if there was no 0 APR offer.
Interest may start accruing if you miss any payments during the introductory period, as well. You might be four months along into a six-month 0 APR agreement, but if your payment is late, you’ll start paying interest and late fees right away. You might be successful arguing your way out of it, but your chances are low, and if your creditor does agree to waive the fees one time, that might be all you get.
If you’re considering doing a balance transfer to a 0 APR card, find out if the 0% applies only to the balance transfer or if it applies to new purchases made during the introductory period as well. You don’t want to be surprised if you buy something with your credit card and suddenly find interest charges on your next statement. It might be a good idea to use the card purely for the balance transfer. A suspension of interest charges can make the balance easier to pay off, but adding new purchases will set you back, interest or no interest.
As long as you understand all the rules, you can use 0 APR to your advantage. Don’t get caught skimming the fine print; you’re the only one who will be hurt! It can be very easy to suddenly set off the interest charges before the introductory period is over, and you could end up defeating the entire purpose of getting the card in the first place.
Categories: Money Resources
