0 Credit Card Interest : Too Good To be True?

By: EconomyWatch Content Team   Date: 19 January 2010

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No one wants to pay interest on their credit cards. In order to keep up with the market and consumer demand credit cards with zero interest are all the rage. This is a great start to getting rid of interest, but it is not the key to paying $0 credit card interest. The secret is a combination of using the cards offering promotional rates and keeping your balances manageable.

If you already have a lot of high interest credit cards with large balances then you need to make use of the 0% balance transfer offers. These are not universal with all credit card companies but they are fairly common. The benefit for the credit card company is that they can charge you a fee for transferring that balance. This may seem like a disadvantage to you, but the benefit far outweighs it.

Let’s say that you have a balance of $10,000 at a 15% interest rate, with the principle and interest charges that amount will increase to $12,000 over the course of a year and you will likely not make much of a dent in your balance. But if you can get 0 percent credit card interest for a year, the one time 3% fee seems quite insignificant. You can use the money that you would have used paying finance charges to make a bigger dent in that balance during the year.

Most credit cards offer zero interest as a promotional offer when you get a new card. This usually varies in length from about 6 months to a year. In order to fully pay $0 credit card interest make sure to keep your balance manageable so that you can pay it off before the promotional term ends. Most cards from major lending institutions do not back charge the interest on promotional offers but some store brand cards do, so paying it off is essential.

Basically this means that if you don’t pay off the entire amount when the 0% ends then they will charge you the interest that it would have accumulated over that entire promotional period. Eventually all 0% offers expire and the problem with interest rates will return. The key to staying interest free is paying off your entire credit card balance every month. There is a grace period on new purchases, so that if full payment is made by the due date no interest is charged.


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