Zero Percent Interest Credit Card

Find out What a Zero Percent Interest Credit Card is All About, and Learn How to Keep the Interest Rate at Zero

What is a Zero Percent Interest Credit Card?

A credit card is one of the most common ways that people are able to access cash that they would not otherwise be able to acquire through other means such as a loan, to make purchases. While it is a convenient way to obtain a measure of financial freedom, that concept can quickly turn into a trap that snares even those with the best of intentions. Some credit cards will attract new customers by offering a low or zero Annual Percentage Rate (APR), however, there are ways to increase this rate, which can make repaying the charges very difficult.

The Time Clock

While a zero percent interest credit card allows for a lot of financial breathing room, there are instances when it can suffocate you. What a zero percent interest credit card offers is a limited time for the credit card holder to transfer balances from other credit cards, such as those with a higher APR and make payments that will be applied directly towards the balance with none of the money being used towards high interest payments. However, these terms are usually limited - some extending as long as a year to a year and half and some for as little as six months. If the balance has not been paid off within the limited terms of the zero percent interest offer, the remaining balance will be subjected to an APR that is somewhat higher, maybe significantly so.

Keep it Down

When you have a credit card with a zero percent interest rate, keep in mind that the zero percent interest usually only applies to a certain type of transaction, such as a balance transfer. Often times, additional transactions, such as purchases or cash withdrawals will not be covered by the zero percent. So, if you transfer a balance onto a zero percent interest credit card and then make purchases with that same card, you will paying a high APR on those purchases. This is where many credit card holders make a mistake as they assume the zero percent interest rate applies to the entire credit card, when actually it only applies to one type of transaction.

Keeping the zero percent interest rate for as long as possible will entail being disciplined about using the zero percent interest rate credit card as a means of quickly paying down debt because when used otherwise, the deal becomes ineffective in helping you.