Thursday, July 12, 2012

How to Choose A Zero Percent Credit Card

If you're shopping for a new credit card, perhaps you're considering one with zero interest. If properly selected, zero percent credit cards allow you to carry a month-to-month balance, at no cost, saving hundreds of dollars in interest. Although credit cards often put people into debt, a zero interest credit card can help you get out of debt. The card enables you to pay off your balance faster, without worry. Before you fill out an application, it's very important to read and understand the terms of a credit card agreement to avoid surprise expenses.

1. Select A Card Without Fees

If you fail to read the fine print, credit cards can accrue unwanted fees, even the cards without interest. The fees are often expensive, increase your debt and prolong the amount of time it will take to pay off the balance. Select a credit card without an annual fee. An annual fee is charged one time per year and the amount ranges from to 0. Rewards cards often charge annual fees, merely for the convenience of owning the card. Paying an annual fee might make sense if the card provides beneficial rewards that you're consistently using, otherwise you shouldn't pay the fee.

Apply for a card without a late payment fee. Fees for paying late can cost as much as and lead to major long-term interest expenses. On top of the late payment fee, credit card companies have the right to raise your interest rate, or terminate your zero interest period, as a penalty for failing to pay your bill on time. The interest penalty for paying late usually results in a very high rate and can negatively impact your credit report.

Try to find a zero interest credit card without a balance transfer fee. Credit card offers often advertise zero percent for balance transfers, but there's usually a hidden 3% fee, which means you would be charged 3% of the transferred balance. If you transfer a large balance to the new card, you could wind up paying hundreds of dollars from the transfer alone.

2. Apply for A Card With A Reasonable Interest Rate

Owning a credit card with zero interest is great, but the savings won't last forever. If you anticipate carrying a balance after the introductory period ends, it's important to know the future rate of the card. Some credit card companies charge interest rates as high as 30%. Choose a card with a reasonable interest rate, preferably less than 15%. Select a card that includes a grace period. With a grace period, you have an extra twenty five to thirty days to pay off your balance before the interest rate kicks in.

Also, there are usually three interest rates noted on a credit card agreement. One rate applies to purchases, while the other rates apply to balance transfers and cash advances. If you're looking for a credit card with no interest on purchases, make sure the zero percent, advertised on the offer, applies to purchases and balance transfers, not only balance transfers.

3. How Long Will the Introductory Period Last?

There are credit cards with zero percent APR for twenty one months and other cards with only a six month term. If you plan on transferring a large balance from an interest-bearing credit card, it would be wise to choose a new card with no interest for at least one year, unless you're confident that you're going to pay off the balance before it expires. Typically, credit cards with a longer term of zero interest, require excellent credit to be eligible. If you're paying interest on another card, it is worth applying for a zero percent credit card.

4. Pick A Card with Rewards

Zero percent credit cards don't provide as many rewards and benefits as official rewards cards that charge annual fees, but you can still find a credit with useful rewards that won't cost you money annually. Shop for a card with rewards that you're more likely to use, such as extended warranty coverage on purchases, price protection, double mile rewards, or cash back. You might find that one credit card with a longer term of zero interest provides more rewards than a competing card with a much shorter period.

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