Zero Percent Credit Cards Info

Although the amount of zero percent credit cards offered has been declining rather quickly over the past two years, there are still dozens available for which to apply.  How do you know what to look for?  They all start off sounding pretty terrific – 0% interest rate credit cards – loans without consequence, right?  Um, wrong…let me give you the short-and-sweet on the basic attributes that sum up a 0% interest charge card.  When you feel confident in your understanding, be sure to take a look at this list of the best zero percent credit cards.

Intro APR - If you look up at the URL, you might guess that every card that I mention on this site will have an Introductory Annual Percentage Rate (Intro APR) of 0%.  This means that if you qualify for a zero percent credit card, for a predetermined period of time, whether it be three, six or 9 months, any charges that you make to that card will be interest-free.

Intro Period - This is the amount of time that the Intro APR holds true.  As previously mentioned, most credit cards of this nature will fall into the 3-9 month range.  Once the period is up, your rate shifts to…

Ongoing APR - The interest rate charged after the introductory period.  Zero percent credit cards won’t always live up to their namesake – this is an extremely important factor to consider.  There will be a set minimum, usually somewhere around 12%.  Depending on your credit score, you may be paying a lot higher.

Default APR - This is any rate that you are charged outside of your ongoing interest.  If you fail to make a minimum monthly payment, or go over your allowed credit limit, this sucker will kick in.  You’ll find that most companies will charge you nearly the max allowed by law – typically in the 30% range.  Pay your balance, people – this applies to all credit cards!

Rewards - This should be pretty self-explanatory, but rewards are any favorable returns you receive for spending with your charge card.  They can come in the form of cashback, gift certificates, frequent flier miles, gas discounts…the list goes on, and depending on what rewards you’d prefer, some options will suit you better than others.

Transfer Fee Rate - This applies to 0% balance transfer cards.  When you want to transfer what you owe from one card to another, they aren’t going to let you do it for free – at least not at 0% for 12 months.  They’re going to charge you a percentage of the balance.  3% is a reasonable rate.  You’ll also want to mind the minimum and maximum fees; many card companies won’t allow you to transfer a balance that pays them less than five dollars (you’re not worth their time).  On the flip, you’ll want to look for caps on fees as well – if you’re carrying a large sum of debt, you may be paying a wicked transfer fee.

Ok, so now you’re hopefully a little more familiar with what to look for when choosing a 0% credit card.  Go out there and choose wisely!

Zero percent credit cards are essentially lines of credit issued by card companies with introductory interest rates of 0%.  Sounds wonderful, right?  Definitely- if you’re very careful.  First off, the definition given in the first sentence has an operating keyword, and that is “introductory”.  There isn’t a credit card company in the world who is going to offer you a permanent fixed interest rate of 0%.  I’ve done my research, and the longest running credit card of this type I could find is the Virgin Money Card, which offers the killer rate for 16 months.  Speaking in terms of longevity, you’re not going to do much better than that (let me know if you do).

So, we’ve established that the wonder rate won’t last forever – that’s ok – a lot of you won’t even qualify in the first place.  “Whoa!”, you say, “My credit score is pretty good, buddy”.  That’s great – you should go buy a house!  However, just having a “pretty good” credit score isn’t going to qualify you for zero percent credit cards.  You need an excellent score – we’re talking 720+ range – anyone who approves you with a score lower than that has something up their sleeve.

If you want to avoid denial, there’s another important factor to consider – whether or not you’re a “card hopper”.  If you bounce from company-to-company with no longevity, it’s going to stick out like a whore in church during the approval (denial) process.  It’s one of the first factors credit companies look for?  If you qualify for a credit card that offers a 0% introductory rate, you’re most likely already in the habit of sticking to a prompt payment schedule.  Regardless of what type of interest free plan you go with, it will be to your benefit that you continue to pay on time.

There’s more than one type of plan?  Correct – there are two types of these credit cards.  Although on occasion, you’ll find one that offers the same rate in both categories (not always as nice as it sounds), they typically fall into either the category of balance transfer or purchasing cards:

0% Balance Transfer

A balance transfer is exactly what it sounds like.  It’s when you transfer the balance on an existing line of credit to a new credit card.  Balance transfer cards are typically employed when one has an over encumbering balance yielding a high interest rate, and desires to pay it off with a more affordable plan.  Considering the average credit card interest rate is around 17%, transferring your balance can often be a good idea.  “A good idea?”, you ask,  “How about a freakin’ great idea!  What kind of idiot would pass up on a 0% balance transfer credit card?”  Well, an idiot who did his homework…c’mon, you knew there would be a catch or two – here they are:

• Remember when I said that zero percent credit cards don’t last forever?  I’m saying it again.  Once that 4 month, 6 month, 12 month…period runs out, that rate is going from 0 to 60.  Well, maybe not 60, but it’s going to skyrocket, and any remaining debt is going to skyrocket as well.  Only sign up for a 0% balance transfer card if you’re sure you can pay it off within the introductory time frame!
• The interest rate may be zero, but there will always be a transfer fee.  These fees usually flirt in the range of 2.5-3.0% of the total balance transfer.  If you’re carrying a balance of $3000, at 3%, you’re going to be paying $90 on top of you’re existing balance.  Just make sure you do the math before you decide.

0% Purchasing Cards

These are plans that allow you to do most of your purchasing without collecting any interest.  These types of zero percent credit cards should only be considered by a debt free customer.  If you’re already carrying a heavy balance on an existing card, this will likely only get you into trouble.  Like its cousin, the balance transfer card, purchasing cards also come equipped with catches:

• This should sound familiar – don’t spend what you aren’t positive you can pay off before the 0% rate expires.  The same consequences apply as previously stated.
• You’ll notice that above, I mentioned “most of your purchasing” can be done without accruing interest.  Read the fine print, people.  If you’re an online gambler, into porno, instant cash advances, or even buying gift vouchers, you may void your zero percent rate by using your card for any of the above.  Before signing up, make sure you know what spending is considered contract-voiding.

That should be sufficient enough for a basic understanding of zero percent credit cards, and how they work.  You’re now aware of some of the benefits, as well the possible consequences of choosing to use a credit card offering a zero percent interest rate.  Explore the site for further information, and please spend wisely!