Zero Percent Interest: The Advantages and Pitfalls for Zero Percent Interest

2007-06-20 15:49:53

( Financial )



If you are loaded with a lot of debt on your credit card, zero percent credit cards may be an appealing offer. Although the zero percent transfer may appear ideal at first, when you take a deeper look you will find out that these offers are not as ideal as they seem.

The Advantages of Zero Percent Interest

Zero percent interest is an appealing feature that gets a lot of interest. While credit cards create the possibility of becoming a risky tool, they can have practical uses. For instance, credit cards permit simple transactions in buying materials over the Internet. Moreover, credit cards provide solutions when encountering cash flow problems.

Zero percent interest is suitable when funding large transactions which you intend to settle in a relatively short month. These cards are more realistic to use compared to high interest credit cards or when applying for a personal loan.

Zero Percent Interest Against Low Interest Rates

There is a huge distinction between a zero percent opening balance rate and a reduced APR interest rate. Supposed you receive a couple of credit card offers. One offer is for a zero percent opening rate and the other offers low a 9.5 percent interest rate.

If you prefer the 0 interest credit cards, think again. Zero percent interest rate cards could be good for only six months and at the expiration of the six months, your interest rate will reach up to nineteen to twenty percent? This doesn’t sound like a fair deal, after all.

Though the opening 9.5 percent interest rate is clearly greater than 0 percent, at the end of six months your payments have exceeded more than the 9.5 percent interest rate.

Looking at other options

If you are thinking of transferring your existing credit card balance to a credit card that charges a reduced interest rate, do not look at the rate of interest only. A lot of credit card issuers collect an amount for balance transfer.


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