You might get a little excited if you’ve recently received an offer for a 0 APR credit card. You might have wanted to send the form in right away. Maybe you just saw the words “0 percent interest” and thought instantly of how many things you can buy without having to pay crazy interest rate. Maybe you thought this will be perfect to help solve all of your credit and loan debt, helping you to consolidate all your bills into one easy low price payment plan with no interest. While all these ideas may be true, there are serious issues that you need to be aware of before you naively start buying everything with your new card.
1. Introductory period is limited
Ok the truth is credit card companies have to make money in some way. So the companies that offer the 0 apr credit cards can’t do so for very long, otherwise they couldn’t make money of you. So most companies only offer 0 apr for about 6 months, and some up to a year. So you will only have 0 apr for this introductory period
2. Very high interest rate
Most of the time when the introductory offer is over, you will be charged an interest rate, very often even higher than average. It’s usually between 19 and 21 percent and can be even higher on cash advances and other transactions.
3. Late payment penalty
If you so happen to be late on a payment or even forget a payment altogether during the introductory period, your interest will immediately go up to the penalty rate. It’s possible for this to get as high as 24 percent on the entire balance.
4. 0 APR is limited
Some credit card companies offer the 0 apr rate on balances transfers as well as purchases during the introductory period. However, look closely at the conditions because some companies will only give you 0 apr for balance transfers and charge you high interest rate on purchases.
5. Conversion Period Is Tricky
When the time comes that you go from paying 0 apr to a normal interest rate, you might get paid interest on any unpaid balances from introductory period purchases
Being aware of these points will help you use the card more wisely, that is if you still want to sign up for it.