As credit card companies seek new customers, they promote a variety of options including a few that offer potential money saving advantages. One such option includes zero APR credit cards.

As you start to review these options, you will see that the companies feature two types of no interest programs. The first is the opportunity to accrue no interest on balances that you transfer from another credit card. The second is a card that has a no interest period for new purchases. Occasionally, you will find a credit card that offers zero interest for both new purchases and balance transfers. Generally, these zero APR credit cards offer this no interest rate for a limited time period.

Often times you will find that a credit card that offers a no interest period for balance transfers, actually charges a higher than normal interest rate on the new spending. Or you will find the reverse to be true, no interest on new spending, but a higher rate on balance transfers.

A few other things to look for when considering zero interest credit cards:

  • Short time periods when this zero interest rate is available. It is usually 12 months or less, and in some cases as little as six months.
  • Higher interest rates or fees are charged on cash advances.
  • Your payment is applied to the lower interest rate balances first, leaving the higher interest rate balance untouched as it attracts the higher interest.

Some consumers are attempting to take advantage of these introductory zero percent rates by engaging in a practice call “stoozing”. This practice requires the consumer to use their credit card for almost all spending, and as this debt is being accrued that amount of money is being put into a savings account. Before the zero percent time period is over, the consumer takes the money from the savings account and pays the balance on the card in full. Some consumers choose to transfer the balance on their original credit card to another zero percent card, if available.

This can be very complicated and requires the borrower to monitor the accounts and deadlines. It also requires the borrower to be very disciplined regarding the money that is being put into the savings account. If the consumer fails to monitor this program completely, the interest saved could be lost in a short period of time.