Credit card users often see advertisements for cards that offer a 0% intro APR on balance transfers. What is less prominent are 0% promotional APRs on purchases. While these promotional rates can offer customers substantial savings, cardholders should carefully understand both their benefits and drawbacks.
Credit cards advertise 0% interest rates in large print, while confining the details to a separate page. The page that describes the precise terms and conditions of these promotions is mandated by law. This page is commonly referred to as the Schumer Box, after Charles Schumer, the legislator most responsible for its requirement.
When examining a credit card’s promotional offer, go straight to the link labeled “terms and conditions” to see the Schumer Box. There you will find the duration of the promotional rate, as well as the standard rates that will apply when it expires. When examining these offers, be careful to distinguish between the promotional rate on purchases, and the ones that apply to balance transfers or cash advances.
Presently, a number of 0% APR credit cards offer introductory rates on purchases that last up to 21 months. You can learn more about these offers here.
First, the same 0% offer may not apply to all applicants. Credit card issuers may vary the offer depending on the applicant’s credit worthiness, and customers must wait until approval before being informed of which offer they have received. While only a small portion of cards offer multiple 0% periods, they should be avoided. Simply look for cards that say “up to 12 months” and stay away from these 0% offers unless you have excellent credit.
When making purchases that qualify for these offers, customers are still required to make minimum payments on the balances accrued. Furthermore, the existing balance will be reported to the credit agencies as an outstanding debt. If this balance consumes a substantial percentage of the cardholder’s available credit, the customer’s credit score can be negatively impacted.
Another issue is the psychological effect that a 0% offer has on cardholders. Just as many cardholders feel that their credit limit is license to spend, a promotional finance rate may encourage some customers to incur substantial debts during the promotional period. They may rationalize that the temporary lack of interest charges constitutes a free loan that they should take advantage of. Technically, they would be correct, but cardholders who fail to pay off their entire balance before the promotional period ends will be faced with interest charges at the standard rate.
Credit cards offers with 0% APR promotions for purchases can be very attractive, but they are not without their risks. By understanding their benefits and hazards, cardholders can utilize them carefully, and in moderation.
Below you can compare the longest 0% APR on purchase offers presently available.
Similar Posts:
- Current Credit Card Sign Up Bonus Deals – August 2011
- Discover $150 Cash Back Credit Card Promotion
- Debit Card Fees: Is it Time to Switch to Credit Cards?
- How to begin your struggle with debts
- Airline Credit Card Reward Benefits That Are Better Than Miles
Post Comment