If you decide to apply for a new credit card, you should always look for a card with a 0% APR introductory period.
Most credit cards offer 0% APR for the first 12 months for purchases and balance transfers, and this can mean some serious savings if you plan ahead.
With a 0% APR credit card, you can make purchases for the first 12 months, paying only the minimum payment each month, without having to worry about paying any interest or finance charges. If you are a responsible borrower that doesn’t let your credit spiral out of control, this type of card can be very cost efficient, and allow you to leverage your money if it needs to be used for other, more important things.
Perhaps the most important aspect of a 0% APR credit card is the ability to transfer balances from other high-interest-carrying credit cards or loans. Why pay 20% on your Best Buy card when you can pay off the entire balance with your new 0% APR credit card, then slowly pay it down for 12 months with zero interest? It makes no sense to keep paying interest when there are available, no-cost alternatives.
However, there is one catch. You need to be a responsible borrower. If you’re late on any of your payments, on any one of your credit cards or other loans, the creditor can cut your introductory period short, and shoot your interest rate up to 20% or higher, depending on the terms of the cardmember agreement.
This is called the universal credit default rule, and though it may seem like a strict rule, it can be easily avoided if you’re responsible and manage your bills effectively.
Once the introductory 0% APR period ends, you can execute a new credit card balance transfer to a new credit card, and extend that 0% interest rate for another 12 months. Keep it mind that you still ultimately need to pay off whatever you spend. The use of 0% APR credit card offers simply offers flexibility, and helps you avoid paying interest, which can result in savings of hundreds to thousands of dollars.
All that said, there is one more thing to consider. Many credit cards charge a balance transfer fee, which is usually the greater of $10 or 3% of the transaction, up to $75. And many balance transfer offers have a minimum transfer amount such as $100 or more, though there are no fee balance transfer credit cards out there.
My favorite 0% APR credit card is the Citi Card, which offers 0% APR for purchases and balance transfers for 12 months, with no annual fee and no balance transfer fee. It’s a great deal if you need to carry credit debt for a while, and don’t wish to pay any interest or fees. American Express Clear is another great card with no fees of any kind.
