0% Credit Cards: What’s the Catch?
With all of the doom and gloom surrounding the credit card industry, a credit card boasting a 0% interest rate sure sounds good, doesn’t it?
But is there a catch to this impressive rate?
A so-called “free” credit card may not be free after all. You may have to pay a yearly membership fee; you may have to pay interest on charges that you carry from month to month; or your interest rate may only be promotional.
Good and Bad 0% Credit Cards
Whatever the catch, it is important to understand that all 0% interest rate credit cards are not created equal. There are some 0% interest rate credit cards that aren’t worth your time, but there are also others that are able to offer fairly attractive terms and conditions.
In order to qualify for a 0% credit card you must have excellent credit. Bottom line: there are no free rides when it comes to great interest rates. If you have paid your dues and maintained an excellent credit score then you may be eligible for some of the lowest interest rates going at any given time.
0% Promotional Rate Credit Cards
There are some 0% credit cards that offer this low rate for a promotional period of time. In other words, the 0% is not forever; just until the promotional rate ends, which is typically about six to 12 months. Although this may sound like a bum deal, the reality is that you could transfer a higher interest rate credit card onto a 0% promotional rate card and save hundreds of dollars in interest over a six month period.
Pay close attention to balance transfer fees and do the math: consider whether it will still benefit you financially to transfer your higher interest rate balances onto a 0% interest rate credit card after you pay the balance transfer fee.
Another common fee charged to individuals with low interest rate credit cards is an annual fee. Although you certainly should not have to pay an annual fee to have a credit card, paying a small annual fee may very well be worth your time if you are able to snag a super-low interest rate.
Finding a credit card with a 0% interest rate is possible; you just simply must realize that it may come with its share of terms and conditions. Often times, these terms and conditions are well worth it, so always weigh your options when shopping for a new credit card.
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