Zero interest rate credit card
Plastic money is a regularly used money alternative today, reason being ease of use and carry, post-payment facility and nominal usage charges. Due to its exponentially growing use, the competition among the credit card issuers has grown very large to the benefit if the consumers. The most versatile feature which has been introduced in the credit cards is the Zero Annual Percentage Rate (APR).¡¨ Due to this feature, the credit card user does not have to pay any interest on the debt/credit taken on a purchase for a specific period of time which ranges from 3-15 months varying from issuer to issuer and card scheme to scheme.
Annual percentage rate (APR): It is what credit costs you each year and is expressed as a percentage of the debt amount. It includes loan's up-front fees and annual interest rate. One should use the APR, which is fit for the cost of borrowing than the interest rate alone when one compares different loans being considered.
Factors to Consider While Taking a Credit Card:
In most cases, credit cards have either a low interest rate, 0% APR, or both. When trying to choose the best offer, the first thing to consider is whether getting the lowest interest rate is more important or getting the longest 0% introductory APR?
If one wants to transfer an existing credit card balance then a longer 0% APR is better as he will not have to pay any interest on the debt transfer. It is also better in case one wants to purchase now and pay later as he can enjoy a longer interest free period.
If one wants a credit card for long-term charges and has no plan to transfer any balance, then a lower interest rate is better.
Quite often, the best offers provide both a 0% APR, and a low interest rate after the end of the introductory period.
Advantages and Disadvantages of 0% APR Credit Card
Advantages:
1. Save money on new purchases that one can pay off fast.
2. Save money by the transfer of existing credit card balances.
3. Enjoy debt interest-free by regularly transferring cards.
Disadvantages:
1. 0% APR is for short term only after which one has to pay some interest.
2. It can cause unwanted spending or misuse of card.
3. Interest charges can come forth after introductory period ends.
4. May be charged higher interest rate after introductory period.
Hidden Facts of Zero Interest Credit Cards
The zero interest offers is mainly for those who have large card balance with significant interest rates. It is sometimes advisable to save the interest charges by taking the advantage of 0% APR and pay the balance off.
Some people are more concerned with no annual fee, rewards points, and membership bonuses. For the one who does not carry a balance, a zero interest offer is useless.
Before going for the offer, one should analyze himself if he is the one who pays off his card balance monthly or the one who carries a substantial balance for an extended period. For the latter consumer, zero interest offers is the best and for former type, the card with the lowest annual fee is the best.
Mostly the zero-balance-transfer and introductory-rate credit card contracts say that the zero-rate deal will be culminated and the card will shift to a higher ongoing rate, if the consumer fails to make the payments on time.
The Cannex credit card report, released earlier few months back, shows that number of cards with zero-rate introductory offers has more than tripled in the past six months. The increase in this number can equally increase the chances of it's unknowingly misuse by the consumer. So never get carried away by the 0%APR offer, rather use your wisdom to choose the best deal.
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