0 Interest Rate Credit Cards: Is it Too Good to be True?
What are 0 Interest Rate Credit Cards?
A 0 interest rate credit card is a type of credit card that offers no interest charges on purchases, balance transfers, or both, for a promotional period. This means that during the promotional period, you won't be charged any interest on your outstanding balance, allowing you to save money on interest payments.
How Do 0 Interest Rate Credit Cards Work?
Here's how 0 interest rate credit cards typically work:
- Promotional Period: The credit card issuer offers a promotional period, usually ranging from 6 to 21 months, during which no interest is charged on new purchases, balance transfers, or both.
- Regular APR: After the promotional period ends, the regular APR (Annual Percentage Rate) kicks in, and you'll be charged interest on any outstanding balance.
- Balance Transfer Fees: Some credit cards may charge a balance transfer fee, typically ranging from 3% to 5% of the transferred amount.
Benefits of 0 Interest Rate Credit Cards
Zero Interest Charges: The most obvious benefit is that you won't be charged interest on your purchases or balance transfers during the promotional period.
- Save Money: By avoiding interest charges, you can save money on your credit card debt.
- Pay Off Debt Faster: With no interest charges, you can focus on paying off the principal amount, which can help you pay off your debt faster.
- Flexibility: 0 interest rate credit cards can provide a cushion in case you need to make a large purchase or consolidate debt from other credit cards.
Things to Consider
Regular APR: Remember that the regular APR will kick in after the promotional period, which can be higher than the interest rates offered by other credit cards.
- Balance Transfer Fees: Be aware of the balance transfer fees and calculate whether it's worth transferring your balance to a 0 interest rate credit card.
- Spending Habits: Avoid overspending, as you'll still need to pay off the principal amount, even during the promotional period.
Popular 0 Interest Rate Credit Cards
Here are some popular 0 interest rate credit cards:
- Citi Simplicity Card: 21-month 0% APR promotional period on balance transfers
- Bank of America Cash Rewards credit card: 12-month 0% APR promotional period on purchases and balance transfers
- Discover it Balance Transfer: 18-month 0% APR promotional period on balance transfers
Conclusion
0 interest rate credit cards can be a great option for those who need to make a large purchase or consolidate debt. However, it's essential to read the fine print, understand the terms and conditions, and be mindful of the regular APR and balance transfer fees. With responsible spending habits and timely payments, a 0 interest rate credit card can help you save money and pay off your debt faster.
