0% Interest – Can I really avoid cutting up my Credit Cards

by Mike on November 6, 2012

0% On your Credit Card

Each month, when you review your credit card statement, you probably shake your head and wonder if there is an easy way to free yourself from a high APR and transfer your balance to a credit card with a 0% interest rate. This could save you hundreds of dollars during the introductory period of a balance transfer offer, but how do you find the best offer?

Before you make any changes, there are 5 important things to consider:

—Make sure that you understand the time constraints of the balance transfer that is offered. The general time limit for 0% interest is 12-18 months.

—What is the interest rate that you must pay if you use the card after paying your balance?

—Are there any rewards or cash back incentives? Sometimes there are special features like gas rebates, sign-up bonuses or other features like cash back or travel cards.

—Are there any balance transfer fees? Sometimes there is a fixed transfer fee (like $75) or a percentage ranging from 0%-3%. There may be a minimum fee as well.

—Find out what the 0% interest actually covers. Will it cover purchases as well as the balance transfer?

Finding those 0% Offers

Recently, it has become more difficult to find 0% offers. Financial institutions worldwide have reacted to the recession by reducing credit card offers. They have had to deal with many defaults during this fragile economy, and they are making sure that they work with the most credit-worthy customers.

Before you begin to look for 0% balance transfer options, be sure to check your credit score. You are legally entitled to a free copy of your credit report once every 12 months. There are three companies that are required to provide you with this information: Equifax, Experian and TransUnion. These sources can be easily found on the Internet and are simple to navigate. If you find any errors, you have the right to challenge your creditors.

 In addition, if your credit score is not as high as you would like it to be, you can quickly begin to improve it by asking a lender for a higher credit limit (especially if this will show that you now have a low balance with a high credit available). Just be sure not to use that extra credit and pay your bills on time.

Here is a short list of credit cards that offer a 0% APR for an introductory period. This is just a snapshot of offers. Card requirements are subject to change, so it will be important for you to go directly to the credit card company to confirm whether this information is still current.

— The Citi® Platinum Select® Visa® offers 0% APR for 18 months on balance transfers and 18 months on purchases. It has a 3% balance transfer fee with a $5 minimum.

— The Citi® Diamond Preferred® Card offers a 0% introduction rate on balance transfers and purchases for 18 months. Then, depending on your credit report, your APR will become 11.99%-21.99%. You also will have 24 hour access to concierge services and entertainment experiences.

— Slate(SM) from Chase offers a 0% introductory rate for 15 months on purchases and balance transfers. For a limited time, if you transfer your credit card balance during the first 30 days, you will not need to bay a balance transfer fee. There is also no annual fee for this card.

—Discover offers an introductory 0% balance transfer for 18 months with a 3% transfer fee and a 0% introductory APR on purchases for 6 months. The Discover® More® Card has one of the best cash rewards programs, offering up to 5% cash back in rotating categories.

—The Chase Freedom® Visa offers an introductory APR rate of 0% for 15 months on balance transfers and purchases. For a limited time you can also earn a $100 cash back bonus after you have spent $500 in purchases in the first three months. This card is also a great “rewards” card with 5% cash back offers in popular categories and then 1% on just about anything else.

In summary, if you have a solid credit history, you are in good shape to transfer your balance from your current credit card to a card that offers a 0% introductory APR. The goal is to pay off your entire balance during that introductory period. You will save a lot of money and will have the comfort of knowing that you are no longer “swimming upstream,” while paying high monthly charges on a debt that continues to increase with high interest rates.



***Photo thanks to dno1967b & Robert Scoble***

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