Trick or Treat: 0% Interest Credit Cards

Credit cards which offer 0% interest for an introductory period can be advantageous financially, and in today`s competitive credit card market, cards with this feature are numerous. These 0% interest credit cards allow cardholders to carry a balance from month-to-month for a specified amount of time, often six to twelve months, which can save cardholders quite a chunk of change if their balance is substantial.

Card issuers offer 0% interest credit cards in the hopes of enticing cardholders to transfer balances they hold on other higher-interest credit cards. Once a cardholder has gone to the trouble to apply for a new 0% interest credit card and transferred their existing balance from another card, they are much more likely to stay with the new credit card, even when the introductory no-interest period ends.

Cardholders should consider applying for 0% interest credit cards in particular if one of two scenarios applies: they are currently carrying a balance on a credit card with a relatively high rate of interest, or they are anticipating making a large purchase with a credit card. In either case, the savings in interest paid can be substantial.

Balance transfer fees are generally assessed by the new credit card issuer. In general, these fees are equal to a small percent of the amount which is transferred or a set dollar amount, whichever is lower. Since balance transfer fees can vary considerably across different 0% interest credit cards, it can really pay off for a cardholder to spend some time comparing various credit card offers.

In addition to balance transfer fees, the terms associated with the introductory no-interest period can vary by card. Some 0% interest credit cards raise their interest rates after just three months, while other cards have an introductory no-interest period that lasts for an entire year or more. While it may be tempting to choose the card with the longest introductory no-interest period, cardholders also need to consider what the interest rate will revert to when the introductory period expires. For a cardholder who carries a monthly balance, a six-month no-interest credit card that then resets to an 8.99% rate will most likely be a better choice than a card with a twelve-month no-interest credit card that resets to a 21.99% interest rate.

To find their best fit in 0% interest credit cards, a cardholder needs to take the time to research multiple credit card offers and carefully study all of the terms and conditions, especially those in small print.