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Posts Tagged ‘0% APR Credit Cards’

With the plethora of credit card options available today, you can use plastic to pay off debt and save money. Using a credit card to get rid of debt, rather than rack it up, may sound strange. But it is possible with 0% APR credit cards. All of the major credit card companies offer 0% APR credit cards. They are a great way to save hundreds, even thousands, of dollars on interest. If you use them wisely, 0% APR credit cards will help you get one step ahead in the credit card world.

What 0% APR Credit Cards Are

APR stands for the annual percentage rate on your credit card. When credit card companies advertise 0% APR, they are giving you the chance to carry a balance on your card and not pay interest on it. The timeframe for this 0% APR is usually between six months and a year.

Some credit cards only include 0% APR on new purchases. Others offer the 0% interest rate for purchases and balance transfers. With the balance transfer option, you can shift the amount that you owe on a card with a high interest rate to the 0% APR credit card. If you pay off the balance within the introductory period, you will avoid paying high fees in interest.
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Low interest credit cards are available as alternatives to those with middle-of-the-road to very high interest rates. If you have a credit card with a high interest rate anywhere from 17% to 24% or higher, then you may not realize that it is costing you hundreds and even thousands of dollars every year in interest alone. Once you understand your credit and how it is impacting your debt situation, you will see how low interest or even 0% APR credit cards can be a much better solution.

Gather Your Statements

Collect your statements for all high and low interest credit cards. Include Visa, MasterCard, American Express, Discover, department stores, retailers, grocers and any other revolving accounts. For each bill, make a record of the total balance, minimum payment amount and interest rate. You might also want to include your estimated monthly payment (if it’s more or less than the minimum) and the monthly finance charge.

Compare Cards

If you compare the numbers for each card, you will be able to see which ones are costing you the most money. The higher the APR and the higher the balance, the more you will end up paying in interest in the long run. And, if you only pay small amounts of what you owe, you can go on paying for over 20 years. Now you can see the benefit of having a low interest credit card.

Categorize Your Debt

Once you’ve figured out which are the low interest credit cards and which are high, you need to categorize them from highest to lowest. Then reorder them, if necessary, based on the estimated amount of interest you would pay for the entire year. In other words, if you have a high rate card with a low balance, the overall interest may be less than a low interest credit card with a very high balance. This step will help you to focus on the cards that are taking the most of your hard earned money.
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0% APR credit cards are an appealing option for frequent shoppers that rely on having a low monthly interest rate when they cannot pay off the entire balance of the credit card in any month. But what you really need to know about 0% APR credit card offers, often times is never discussed.

For starters, the APR is the commonly-used acronym for “Annual Percentage Rate,” which is the annual month-to-month rate that you can expect to get for your credit card balance. Naturally, if you frequently carry your credit card balance over from month-to-month, it is important for you to have a low or even 0% APR credit card.

How it Works

Every credit card company makes money when shoppers use the card, but do not pay off the balance at the end of each month. Because the credit card company has lent shoppers money so that they can make their purchases, the credit card company will charge interest on the balance until the entire balance is paid off. The credit card company has the potential to make a generous profit from the balances of their customers each month. Naturally, as a consumer, having a 0% APR credit card means that your balance is carried over from month-to-month without any charges applied.

Beware of High Interest Rates

It may seem like credit cards actually lose money by investing in a 0% APR credit card promotion. However, the 0% APR credit cards actually help credit card companies find customers. For example, if there is a shopper that has a high APR (some are up to 20%) and he or she is having a hard time paying down the balance of the credit card, the purchaser is in an ideal situation to transfer their balance to a 0% APR credit card for a period in which they can focus on working down their debt. The situation is ideal for someone who is in short-term debt. However, to balance the 0% APR credit cards against the credit card company’s need to make a profit, as soon as a trial period expires, many credit card companies will increase their rates drastically. As a consumer, you need to read the fine print so that you are aware of the deadlines associated with this change-over.
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The era of 0% APR credit cards is still with us. Yes, you can obtain a spanking new credit card featuring a very low introductory interest rate and take advantage of what amounts to “free money” for you for up to one year. You can use your new card to your advantage, but you must be careful that you fully understand how a 0% APR credit card works to order to maximize its effectiveness. I will show you how, so please keep reading for all the informative details!

Soon after the new millennium started, interest rates began to drop to historically low levels. By 2002, loan rates for government funds dipped to just less than one percent, pushing consumer loan rates down with it as well. Credit card providers, seeing a terrific opportunity unfolding, immediately began to offer 0% APR credit cards to new card holders and even extended the offer to their current customers.

Today, interest rates have been climbing for two years, but 0% APR credit card offers are still available to you. Quite frankly, the entire lending business is very competitive and credit card providers are willing to forego interest for up to twelve months in order to get your business.

To maximize the effectiveness of 0% APR credit cards, there are a few things that you must know:

Limited Time Offer. 0% APR credit cards contain an introductory period lasting typically from six to twelve months. This means that anything you charge during that time will not accumulate interest. Go ahead and spread out your payments over several months: If you purchase something for $1000, you can make four equal payments of $250 interest free. Keep earning interest on your savings and let the credit card company fund your purchase!

Transfer Balances and Save Big! Many 0% APR credit card offers will allow you to transfer balances from your existing credit cards to your new card and waive transfer fees. If you owe $3000 on your current credit cards and are paying 19% interest on your balances, you could save nearly $600 in interest payments over twelve month’s time!
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