Zero APR credit cards are credit cards that charge a 0% interest rate. These cards are fairly common nowadays, but they do contain a number of catches. Used wisely, they can be a great financial tool.
There are two kinds of Zero APR credit cards – credit cards that offer 0% interest on balance transfers and credit cards that offer 0% interest on purchases.
Balance transfer credit cards
If you obtain a balance transfer credit card, you can enjoy a 0% APR on the amount of money that you transfer. Usually, there is a limit to the period of time that you can enjoy this 0% APR. Generally, the period lasts for three to six months.
Using a 0% APR balance transfer can help you to control your credit card debt. The 0% interest rate can give you some respite from the high rates you may be otherwise paying, and give you some time to get your finances in order so that you can repay all your debt.
The important thing to keep in mind if you do obtain a 0% balance transfer is that you should make sure to pay off the entire balance before the interest free period is over. If you fail to do so, you will be charged the regular interest rate on your balance transfer amount.
Another thing to keep in mind when using a card that offers a 0% balance transfer interest rate is that these cards should not be used for purchases. Purchases incur a high interest rate that is applied immediately.
Zero APR purchase cards
A zero APR purchase card will offer a 0% rate of interest on any purchases you make using the card. Usually, the period of time during which you can enjoy the 0% rate of interest is quite short, normally only a month or two. However, there are a few cards in the market that do offer the zero APR for a year.
When using a zero APR purchase card, you should remember that the 0% interest rate does not apply for cash outs and transactions other than purchases.
Banks run to make a profit, so Zero APR credit cards exist to attract new customers. Ultimately, the banks do plan to make a profit off the new customers. So if you do opt for a zero APR card, you should make sure you understand all the terms and conditions involved.
