If you are in the market for a credit card or looking to transfer an existing balance from another card then chances are you have come across a few 0% credit card offers.
Are these worth investigating or just another ploy by the banks and credit card providers to get your business? The correct answer is that these offers are a little bit of both.
Yes, they can be worth investigating further and used wisely they can save you a bundle in interest payments, but at the same time it is wise to remember that there is no such thing as a free lunch.
The banks and credit providers do use these offers as a way of enticing you over to use their services and may be just offering this interest rate on balance transfers and they all have an expiry date on the interest free period.
It's what happens after the interest free period that you should be most concerned about.
For example, you may be looking at a zero percent interest rate balance transfer card to try and get your debt level down.
These offers are an excellent way of doing this, however you must take in to account any fees that are payable on the balance transfer.
Usually these fees are a percentage of the balance that you are wanting to transfer to the new card and are a minimum of fifteen dollars up to a maximum of seventy five dollars.
Is this fee and any other fees payable on this new card likely to be less than the interest accumulated over the zero percent interest period of the new card? Also what will the annual percentage rate be when the low interest period is over? This can be a trap for unwary players where the interest rate charged after the low interest of interest free period is over is quite a bit higher that the interest rate charged on other cards.
Sure, if you use the new card simply to pay off an existing balance and make no purchases with it you are in effect getting a interest free loan but you do need to be aware of the charges if you are unable to pay off the balance within the specified low or no interest period.
Penalties for a late payment can also greatly affect the amount of interest that you are charged.
With some of these offers even just one late payment can see the no interest period stopped there and then and the card and it's balance will then be subjected to the standard interest rate.
It is definitely not all gloom and doom with these offers and used correctly they can be a great way of reducing debt through low or no interest payments but you simply must find out all you can about the offer that interests you the most.
Don't take it at face value, after all the banks and credit providers are making the offer look at enticing as they can and for your own peace of mind and security read every word of the fine print!