Personal Finance and Investment

Credit cards are one of the many essential necessities of the contemporary world. These days credit cards are available abundantly.  There is one specific type of credit card, which is called 0% APR credit card. 0% APR credit cards were originally introduced in the end of 1980’s and up to present day still remain one of the most popular types of credit cards available. Similarly to any type of credit cards, with 0% APR credit cards there are a number of tips and tricks that all people applying for them should bear in mind.

Using 0% APR credit card means that all you need to pay eventually is the amount borrowed without any interests; and what’s more you may even use the full credit limit without having to pay any monthly interest fees at all. Having said this, one may ask just how those banks and financial companies can afford to offer 0% APR credit cards, and still make a profit out of them?

The thing is that even though 0% APR credit cards do not involve any monthly fees, they usually come with annual charges, which you have to pay for the privilege of having a 0% APR credit card. These annual fees are typically in the range of $15 to $20 or, occasionally, a bit higher. Getting a 0% APR credit card doesn’t mean that you may pay out your debts whenever and whichever way you prefer to. It is still BETTER if you make the payments on time, otherwise, you will also incur high overdue fees. For every delayed payment, the 0% APR credit card holder must pay charges that may run from $20 to $40. With late payments becoming a habit, these small amounts may quickly build up to a bulky total!

One should remembered that 0% APR credit cards are generally valid for only a fixed period of time. This time interval is typically in the range from 3 to 15 months. After this period in ended, a higher interest rate may come into play, typically 12% or even higher. The good news is that you can easily transfer any outstanding balances to a new 0% APR credit card to obtain 0% APR on the balance transferred. By doing so, the credit card holder will pay less interest for a fixed period of time, and therefore will have a chance to clear the balance as soon as possible.

When applying for a 0% APR credit card, you should always take time to read the terms and conditions of the credit card company.  You may, of course, ask why should you do that? Simply because lots of credit cards may have a default rate wherein delayed payments not only entail a late payment fee, but also this default rate may be added to the annual interest rate. This in turn doubles the numbers on the current outstanding balances and on all new purchases made with the card after that.  Ouch!

One extremely important point to consider when applying for a 0% APR credit card is to carefully read all the paragraphs of T&C, including the so-called small-print. Despite that it is illegal for a credit card company to conceal their charges and fees, it is perfectly legitimate for them to describe those things in small print! The credit card companies thus typically proclaim their 0% APR deals in large and bold fonts, whereas hiding the accompanying information that the promotion charges are only valid for a restricted period of time and that extra fees may apply in rather small print.

Another trick that 0% APR credit card companies usually employ is to introduce enormous APR’s straight after the 0% APR balance transfers are paid off. That is to say the amount you initially pay to the credit card company is applied to the transferred balance only, whereas any other purchases you make with the credit card will incur a regular APR that can be 12% or even higher.

Occasionally credit card companies may also go to the extreme of sending you a credit card that is different from the 0% APR card you had originally applied for.  If that is the case and you didn’t check it, you may start using a credit card with rather different APR, as well as terms and conditions. The company issuing the card usually rationalizes this behavior by saying they have determined that you did not qualify for a 0% APR credit card, and they issued you another card instead. The problem is that possibilities for these “workarounds” are usually stated in the small print of the T&C, and thus are often overlooked by applicants!

In summary, although 0% APR credit cards do seem to be quite appealing, there are quite a few loopholes, and thus a number of tricks and precautions have to be used. We highly recommended to thoroughly read the terms and conditions when applying for a 0% APR (or any type of) credit card, to avoid financial problems and unpleasant surprises in the future.