0 Interest Credit Cards – How Do They Work
As you shop on the Internet for a new credit card, there are a number of categories the various credit card offers will be listed under. Some of the more popular credit card offers are the 0 Interest Credit Cards. Using the credit card companies’ money and paying it back at 0% interest would be appealing to anyone.
0 Interest Credit Cards Fall Into the Following Categories:
- 0% Interest on Purchases Only
- 0% Interest on Balance Transfers Only
- 0% Interest on Both Purchases and Balance Transfers
A credit cardholder needs to realize this kind of offer is simply a marketing strategy and will not last for long. Credit card issuers are in the business of issuing credit cards to make a profit. They are willing to offer you 0% Interest for a short time, because they are counting on the fact that you will have their credit card for years to come and they will have plenty of time to make their profit over the entire length of time you have their card.
The 3 questions listed below will help you make an informed decision before applying for your new 0% Introductory Rate Credit Card.
How Long Will My 0 Interest Credit Card Be Interest Free?
The actual length of your 0% introductory Interest rate will depend on your credit history. If you have an excellent credit history, your 0% Interest rate will be for the maximum length of time allowable. If your credit history is limited, or your credit score is a bit lower, you will receive the introductory rate on your 0% Interest Credit Cards for a shorter period of time.
The 0% Interest Credit Card Offers are normally aimed towards people with higher credit scores. The 0% Interest rate normally lasts from 6 to 12 months. However, there are currently a few cards offering a 0% introductory rate for up to 18 months. After that period, the regular interest rate will go into effect.
What Will My Interest Be After the 0% Introductory Period Expires?
Check the terms and conditions to see what the credit card company will charge you when the 0% Introductory offer expires.
When reading the fine print of any offer, the issuer normally gives you an estimated go-to rate of say between 10.99% to 17.99%. The actual interest rate you will be charged depends entirely on your credit history.
Ideally, you would like to find a credit card that will give you a reasonable length of time to enjoy the 0% Interest rate and then offer a competitive interest rate after the 0% Interest offer expires.
However, if the 0% Interest Credit Card offer is for 12 months or more and you have made all your payments on time, you can always apply for a new credit card when the 0% Interest rate expires. Then transfer your balance once again from the higher interest card to the new credit card.
What Other Things Should I Consider?
The idea is to get the maximum benefit from your 0% Interest Credit Card Deal. 0% Interest Credit Cards with high annual fees or other charges could put a dent in any savings you were counting on in applying for the Credit Card in the first place.
If a 0% Interest Credit Card tries to compensate for the loss in revenue by charging exorbitant fees and charges on other services it’s best to keep looking.
