A zero APR credit card, one that is interest free for an introductory period, is often the best possible card when you want a new credit line. However, this doesn’t make all interest-free credit cards great for everyone. There are some things to consider before you apply for a new card, even when this card has seemingly wonderful features.
Low Credit Card Rates Are Good, Penalties Are Not
A number of studies done after the credit crunch have concluded that people who get into credit card debts do so because they choose the wrong card for their situation. And as it happens, a zero APR credit card is often the type of card that has the strictest penalty conditions, which of course is not good if you get into debt.
Things to Consider
Strict penalty conditions however, don’t have to make a zero APR credit card a bad choice. Such cards remain advantageous, and are often the best choice for an existing card holder. The trick is to consider a few things when getting a low APR credit card:
- Look closely at your current finances. Do the math before opening a new credit line. Get a new credit card only if you really need it.
- Don’t act without knowing your current credit score. If it’s below 640 then consider improving it before submitting a new credit card application.
- Check the conditions under which 0% interest is offered. There are always some conditions. For example, 72% of card offers have low promotional rates that can be revoked by the bank after just one late payment.
A fixed interest rate is usually preferable to a variable interest rate. Try to get a card that has a fixed rate after the 0% introductory one.
0% interest for a limited period is not enough. The card you get needs to have other good features as well. The rewards program should be worth it. The annual fee should be non-existent or at least insignificant. There should be no hidden fees.
Make sure you understand that there are different kinds of interest rates, too. Some apply to balance transfers, others to purchases.
0% Interest Is Great
A zero APR credit card is ideal as long as it comes with other good features and you know all the terms and conditions. Just don’t rush and apply for the first offer you stumble upon and you’ll be fine.