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Are 0% Credit Cards Always the Best Choice?

Choosing Credit Card

You open your mail to find a very attractive 0% credit card offer staring you right in the face. You may automatically think you have found the answer to your high interest rate cards, but is a 0% card always the best choice?

Credit cards that offer 0% introductory rates are great for some consumers; however, if not used correctly, they are not quite as good of a deal as consumers may think.

Beware of Balance Transfer Fees

Although you may be offered a 0% credit card balance transfer offer, it is important to realize that there may be strings attached to this offer. In particular, most credit cards that offer 0% introductory rates also charge balance transfer fees.

Balance transfer fees are often charged in one of two ways: as a flat fee or as a percentage of the transferred balance. It is wise to research the balance transfer fees on a 0% credit card, as they can vary widely.

Consider if you are transferring a $10,000 balance: with a three percent fee you will be charged $300; at five percent that number jumps to $500. In other words, 0% percent may sound fantastic until you consider the related costs of transferring balances.

Consider the Term of the Introductory Offer

Consider the length of your 0% introductory rate when applying for a 0% credit card, as it could determine whether the offer is right for you or not. In particular, take a good look at the card’s rate once the introductory period has expired.

For example, if you are transferring a large balance, paying a balance transfer fee and cannot pay off the balance during the introductory period, you may also be socked with a high interest rate, thereby leaving you little options but to pay off the balance at the current interest rate or transfer your balance to yet another card.

In conclusion, it may be worthwhile to transfer your balances onto a 0% credit card, but only after you have considered all of your options and all of the related fees and expenses.

An Overview of some of the Best 0% Credit Cards

Credit Card Rewards

We love 0% interest credit cards and it’s been great seeing their return to the credit card marketplace following a couple years of super-tight lending standards.

If you want a 0% interest credit card and you have the credit history to earn one, then you owe it to yourself to check out some of these credit cards:

• Citi Platinum Select Mastercard – This is the no-frills credit card you’ve been searching for. If you have flawless credit and you simply want a great credit card with a 0% interest rate then you need to check out the Citi Platinum Select Mastercard. Don’t expect rewards, airline miles or rebates with this card, though; you can, however, expect a 0% interest rate for a full year on all your purchases. In addition, expect an 18-mont, 0% interest balance transfer offer, as well. However, expect to pay a 4 percent service fee for doing so.
• Capital One VentureOne Rewards – Capital One isn’t giving their VentureOne Rewards credit cards out freely, but if you have the credit history to back you, then you can enjoy this prime credit card. The VentureOne Rewards credit card offers flexible travel rewards and loads of bonus opportunities. In addition, Capital One doesn’t charge foreign transaction fees, thereby luring in many travelers. The 0% promotional rate for this card runs between nine to 12 months.
• Chase Slate – Chase’s Slate credit card offers a 0% balance transfer offer, along with a 3 percent service fee. In addition, this card offers 0% interest on purchases for 12 months.
• Citi Diamond Preferred – The Citi Diamond Preferred credit card offers just about everything for the consumer with excellent credit. From bonus points and a great rewards program to a 0% interest on balance transfers (along with a 3 percent service fee), Citi Diamond Preferred is a great choice. In addition, this card offers an incredibly low “prime plus” interest rate beyond its promotional period.

0% Credit Cards: What’s the Catch?

Introduction

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.