These credit cards offer a period of time where you pay absolutely no interest on either new purchases, balance transfers, or sometimes both. It is always important to check what the credit card offer is actually going to allow you to do. Some of the offers have up to 12 months of no interest, but thereafter, the interest you pay is high. Remember to check the fine print.
Will you qualify for zero interest credit cards?
Not everyone who applies for a zero interest credit card will be approved! Generally people who pay their instalments on time and who have not defaulted will be approved of such an offer. Some people tend to move from one credit card to another, so they remain with one credit card for a short period of time. This may hamper your opportunity to be approved of zero interest credit cards because the credit card companies want their clients to stay with them for as long as possible. It is also important to note that the credit card underwriters have specific requirements that you will need to meet. They look at things like job security, income and employment status. If you don’t have a fixed income or permanent job, chances are you won’t meet their requirements, as the credit card companies need to be reassured that their clients will be able to pay their monthly instalments.
Here are some important aspects to look at if you do get approved of such an offer:
- How long does the initial rate last?
- After the teaser rate expires, what will be the interest rate?
- Does the initial teaser rate apply to new purchases, balance transfer, or both?
- Is there a balance-transfer fee?
- What about late payment fees and over-the-limit fees?
Should I choose a zero interest or low fixed credit card? First you need to consider your spending habits. If you pay your debt off quickly then it is wiser to choose a low fixed credit card, as the interest you pay back will be minimal. For those of you who battle to pay your monthly instalments, a zero interest credit card would be more beneficial. The reason for this is because during the initial offer you can save a lot of money and try to reduce your financial burden.
Another reason to opt for the zero interest credit card!
If you are buying something very expensive, you don’t have to pay loads of interest back to your card. Instead, your monthly payments go directly to paying back the money you’ve spent.
In cases where you have a lot of outstanding debt with various companies, you can pay back all the debt on one card at no interest.
Some of the zero interest credit cards also offer things like travel miles, and cash back for example.
If you choose a zero interest credit card, make sure that you pay off the debt before your introductory offer is up. Some of the credit cards offer a reminder service to let you know when the zero interest period is coming to an end.
There are people who move from one zero interest credit card to the next using the no interest offer to the max and thereby paying no interest, but the credit card companies don’t like this.
It’s important to note that these offers are becoming more scarce however and will in time be phased out.
Some of the zero interest credit card offers you find may be termed ‘Business Credit Cards’, but that doesn’t mean that you have to be a small business owner. You can put in your own name and Social Security number as your business when applying.
When you have debt, it is important to get your financial situation under control and pay your debt off as diligently as possible. Remember to always read the terms and conditions as you need to know everything about the contract you will be signing.
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