Many people who use credit cards are very concerned with the interest rates. This is the additional amount a person pays every month based on their credit card balance. With credit card interest rates changing regularly and ranging from a 10.99 annual percentage rate (APR) to 15.99 APR and higher, an offer of a zero interest rate credit card usually gets attention.
Why would a company offer a zero interest credit card?
Before the illusion of using a credit card indefinitely and paying no interest comes to mind, it’s best to understand the reasoning behind these types of offers. Credit cards with a proposed zero percent rate is usually offered to customers who have an excellent credit rating. The goal is to entice these people to transfer the balances from their other credit cards onto the new one or make a large purchase because they’re motivated by the thought of paying no interest. Unfortunately the zero interest rate will only last a certain period of time. This grace period could last from 6 to 24 months. After that the regular interest rate or higher will apply. This is also the time when most companies apply their annual fees.
Benefits of $0 percent credit cards A person paying a high interest rate for their current card and feels they could pay off the balance during the grace period provided by zero interest credit card, might want to consider it. If the interest rate after the grace period is lower than what they’re currently paying it may also be a good deal.
Are $0 percent credit cards popular?
A recent survey conducted by The Aite Group indicated that credit card users regard $0 annual fees and loyalty rewards as more important than the rate of interest they would be paying with a new card.
No cash advances with $0 percent credit cards.
Anyone who has the idea of getting a zero interest credit card, taking out a cash advance, depositing the cash advance into a high yield savings account and then paying the credit card off at the end of the zero interest grace period, can forget it. The banks are aware of this idea. It is almost impossible to find a zero interest credit card that permits cash advances. The information they provide with the credit card will give a detailed definition for what they consider a cash advance, balance transfer and purchase.
Not all credit card companies are the same.
J.D. Power and associates conducted studies to find out which credit card companies were the best. Based on their 2011 customer satisfaction study, American Express and Discover card were rated best for benefits and services, Credit card terms, reward factors and more. On the other end HSBC, Citi cards and Bank of America got the lowest scores in terms of customer satisfaction.
Gather all necessary information
Before deciding to respond to a zero interest credit card offer, it’s best to read all the fine print and ask questions. Knowing what you want from a credit card company and finding one that provides it, has a good reputation and the right offer is very important. It could make the difference between a comfortable balance transfer and one that develops regrets.
Being one of the most proficient authors on all sorts of finance related topics, Myke Jones has been excelling himself with articles on zero interest credit card. He is a regular contributor to http://frugaldad.com/low-interest-cards for the past decade.