0% APR Credit Cards’ Pitfalls You Should Be Wary Of
When choosing a credit card, one of the most important criteria for many applicants, apart from a $0 annual fee and rewards program, is the presence of a 0% intro APR period. In brief, once you apply for a 0% interest credit card and get approved, you can make purchases during the specified intro period, which can range from 6 to 18 months depending on the offer, without being charged interest. You just need to keep within the approved credit limit and make at least minimum payments.
Indeed, such cards can save you significant amounts on purchases, especially large ones like household appliances or airline tickets. Even better if such cards in addition to 0% APR on purchases also come with 0% intro APR on balance transfers. In this case, if you carry a debt on other credit accounts without 0% APR or where the intro period has already ended, you can simply transfer it to a new card and pay off faster without additional charges.
In fact, it is not a problem to find a suitable no interest credit card. The credit market now abounds with such offers from various issuers. However, you better know all the possible drawbacks before applying.
Not suitable for applicants with poor credit
Although zero intro APR credit cards are so attractive, not everyone can appreciate the benefits of these offers. As a rule, only applicants with good or excellent credit can qualify. If your score is lower than 700, the chances are minimal.
Minimum monthly payments are still required
Yes, the intro period gives you the opportunity to avoid huge monthly spendings, yet it doesn’t entirely cancel all payments. In any case, every month, you will receive a statement with an indicated minimum amount you need to put on your credit card. Otherwise, you risk running into huge late payment fees.
Can be canceled by the bank
Late payment fees are not the only penalty for missing payments. Such delinquency may also cause a total cancellation of the introductory period. And some banks, in addition, will assign you a higher rate instead of the standard one.
Freebies always end
Even if you are a responsible cardholder and always make payments on time, the intro period is limited and will anyway expire sooner or later. Therefore, make sure to correctly calculate your monthly payments and manage to pay off the debt before the deadline. The regular APR you get after that may not be low.
Balance transfers are not always an option
If you plan to use your new credit card to transfer a balance, be careful. 0% APR on purchases does not automatically mean 0% APR on balance transfers. Check if the card allows balance transfers at all. And do not forget that, as a rule, you will have to pay a balance transfer fee. Better use a balance transfer calculator beforehand.
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