Spending money on interest can be expensive, especially when we are talking about credit cards. Credit card interest rates can be a minimum of zero per cent; however, this does not happen for long. Let’s take a look at what it means to have zero interest credit cards as opposed to some of the other deals that have existed over time.
A 0 interest credit card means you do not have an interest rate for a specific period of time. The period of time may be three months or 24 months. There are some credit cards on the market right now offering up to 22 months of free interest on balance transfers and purchases. The minimum you usually see is 3 months on purchases and 6 months on balance transfers. The average is generally 3 months on purchases with 12 months of free interest. After this time period is over you are charged the typical APR. This APR can be 7.99 per cent to over 30 per cent. The typical APR at the moment is 17.99 to 19.99 per cent. This is a rather high interest rate, but if you can use the credit card in your favour then you do not have to worry so much about interest. Before talking about that let’s look at more details with regards to zero interest credit cards.
Balance transfers may not be in conjunction with a zero rate on purchases. Balance transfer credit cards with zero interest are meant to help you pay the balance off without being charged high interest. Usually there is a fee of 2.9 per cent to 5 per cent. This is a balance transfer fee which is charged when you move a balance from one card to another. The fee is set by the new credit card with the zero interest. In certain circumstances you may find this fee is waived, but it is not always possible.
There is another option to the 0 interest credit card option. You could find a life of the balance transfer. This credit card means you pay interest, but you save because of the average APR rates. For example you may be able to get a rate as low as 3.99 per cent on the balance transfer. That is definitely better than 17.99 per cent for a balance transfer, which means you save money over time. The “life of the balance” also means that until you pay off that particular balance on the card you will be charged the lower interest rate. It does not cut off after a period of several months, thus saving you money until the card is paid off.
If you elect to go with zero interest credit cards, you will want to consider what happens after the introductory period is over. It is best to have the card paid off in full and then to use it only for those purchases you know you can pay off rather than paying a finance charge each month.
This entry was posted on Wednesday, December 21st, 2011 at 2:40 pm and is filed under Travel Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
