Should you take advantage of zero percent interest rate credit cards? The main issue that people have with credit cards is the high-interest rates. If you can get rid of that, even for a short period, it would make these cards very appealing, right?
With a 0% interest card, there is a lesser chance for your debt to grow bigger than it has to. You do not have to worry about paying any finance charge in case you cannot afford to pay your balance in full at the end of the month.
Most of the time, these 0% offers are given to entice new applicants. Before you apply for a new credit card, there are several questions that you need to ask yourself first. It is very important for you to get to know the card because failing to do so might lead you to make the wrong decisions about it. And once you start making the wrong choices, it will usually end up with you accumulating a lot of debt.
According to reports, Americans have continued to accumulate more credit card balance. It is revealed that the average American household owes $15,654 worth of credit card debt. You can bet that as the holiday season progresses, more people will probably add more to their existing debt. A lot of Americans will be faced with debt early next year. That is not really the best way to start another year.
Signs that a 0% interest card will benefit you
While there is a huge benefit in taking advantage of zero percent interest rate credit cards, you need to make sure that it is the right move for you. If you make the wrong move, it might cost you more problems. You could end up taking in more debt and that might be harder for you to get out of.
There are specific financial situations that will prove to you that you need to get a 0% interest card. Here are two of the most important ones.
You cannot pay your balance in full
The first sign is your inability to pay your balance in full. When you carry over a balance to the next month, there will be a finance charge added to that. This finance charge is usually calculated based on the interest rate of your card. The higher the interest rate, the bigger the finance charge that will be added to your balance. If you have a 0% interest card, there will be no finance charge added to your balance. If there will be one, it will be very small. You do not have to worry about your debt problems growing. At least, you do not have to for a certain period.
You have a high-interest credit card with a high balance
Another reason to consider getting zero percent interest rate credit cards is when all your other cards have a high-interest rate. As mentioned, the higher the interest, the faster your debt can grow if you cannot pay it in full at the end of the month. With the news that the Federal Reserve System will raise the interest rate further, you can expect that credit card companies will follow. When they raise their rates, your already high-interest will make it harder for you to pay off your debt – especially when you cannot afford to pay it back in full. The finance charge will keep on growing and might be harder to keep up with.
The 0% interest on a new card will help you pay off your credit card without fear of it growing because of the finance charge. Obviously, you have to opt for balance transfer so you can transfer the current debt of your high-interest credit cards. Take advantage of the time that you have to pay for your balance.
If you have these two debt situations, then getting a 0% interest card makes sense. Of course, applying for one and transferring your current debts is only half the journey. You still have to make sure that your debt will be paid.
Tips before you get a 0% interest credit card
Before you start going through the best zero percent interest rate credit cards being offered, there are a couple of tips that you need to consider first. As mentioned, this should be done with a proper plan in place. You need to know how this new credit card will affect your finances – specifically your credit report. Not only that, you have to know what to do after you have applied and gotten approval for the new card. You need to understand how you should pay for it. Knowing how to be wise in using the card is also an important information that you need to look into.
Here are some tips that will help you approach this new credit card the right way.
Read the fine print
First of all, you need to read the fine print. According to reports, there are some credit card companies that have been quite sneaky when it comes to the terms and conditions in the fine print. Apparently, they have “mandatory arbitration clauses” that will force you to settle disputes outside a court. While this is something that some credit card holders would opt for, it should not be forced on everyone. You need to get to know these details so you know what to expect from your use of the card. The fine print will contain a lot of useful information – including your responsibilities and that of the credit card company. It will also give you insight on how you can avoid certain charges – like late penalties, etc.
Find one with a long promo period
Nothing good lasts forever. That is the sad truth in life. The same is true for zero percent interest rate credit cards. It will not last forever. Once the promo period expires, the card will take on a high-interest rate. This is why you need to look for a 0% interest card with the longer promo period. There are those that will only last for 6 months but there are those that can last for more than a year. In fact, some of the best cards will last for 15 months. You want to get one that lasts as long as possible because it will give you more time to lower your debt level.
Get as many freebies as you can
Another thing that you might want to do is to get as many freebies as you can. Some of the creditors offering 0% interest cards may be willing to waive the transfer fee and annual fees. You might want to discuss this with them to make sure that you are getting everything that you can out of the new card. Usually, the credit card companies will give you a lot of freebies to make you choose them over their competitors. Just make sure that you understand what it is that they offer and that there are no hidden fees or clauses somewhere.
Have a plan to pay off the balance transferred
Finally, and probably the most important one, you have to make sure that you have a plan to pay off the balance that you put into the zero percent interest rate credit cards. Balance transfer credit cards can be an effective way to get out of debt. But you have to make sure that you can take advantage of the 0% interest rate. It is important to try to pay all the debt before the introductory rate expires. If that is not possible, then at least pay off as much as you can. That also means you should keep yourself from adding more debt to it. Avoid using the card for purchases until after you have paid everything off.
If you think that you can follow all of these tips, then getting zero percent interest rate credit cards should be a wise move for your personal finances.