What Is A 0% APR Credit Card? Many of us have heard about them, but has anyone every explained 0% APR credit cards to you? Well, for starters, the APR or annual percentage rate is the rate of interest credit card companies charge on outstanding payments. The amount you are charged depends not only on the rate of interest, but also on the method of calculation of rates of interest. 0% APR credit cards are credit cards that charge you no interest on credit, for a specified period of time. The best 0% APR credit cards offer 0% APR's to customers for up to 12 months. After 12 months the credit card issuer charges you at the normal rate. The card issuer assumes a risk by offering you interest free credit for such an extended period. They balance that risk by offering 0% APR credit cards to only customers with the best credit.
What Determines Your Credit?
Your credit depends on a number of factors. Your credit score, also known as the FICO score is widely used as a credit rating for Americans. Since your credit rating will determine whether you are issued a 0% APR credit card, knowing what goes into the score helps a great deal. Your credit score is determined based on five parameters. The most important among these parameters is your current debt and your history of repayment of debt.
The other three parameters for calculation of credit score are the length of your credit history, amount of new credit and types of credit used. Based on these five parameters, the individual is given a score ranging from 300 to 850. This is indicative of the credit worthiness of the person at a particular point of time. People with credit scores above 770 usually qualify for a 0% APR credit card. However scores above 700 are also considered good. 0% APR credit cards typically require, at a minimum, very good credit and often will require excellent credit.
One method used by customers to avoid interest is balance transfer credit cards. It is possible to shift from a credit card that charges interest to a 0% APR credit card using a balance transfer, provided you have the requisite credit. Once the introductory period of the card expires, people often shift to other 0% APR credit cards using the balance transfer method. Doing this however harms your credit rating and can hurt your prospects of receiving good credit in the future.
Prudence Pays
It is good to be informed of clauses like the universal default clause. This clause states that if you default on your payments to one creditor, for example a bank, it affects your credit rating and can increase the rate of interest you are charged elsewhere. Responsible vendors realize that informed customers make for the best customers in the long run.
0% APR credit cards sometimes come topped with other offers. You can find a variety credit card offers online that come at 0% APR from the best companies. Choose the 0% APR card that makes the most sense financially and functionally. And always try to maintain you good credit rating that got you your 0% APR credit card in the first place.
0 Apr Transfer Credit Cards
As you look for a new credit card, you'll find that many offer a feature known as 0% APR. This means you will not be charged interest for a certain period of time after you sign up for the card. Is this condition worthwhile? Or should you be searching for other benefits? Read on to learn what's involved in 0% APR offers, the advantages of them, and whether or not they are the right pick to add to your credit card collection.
A Look at 0% APR
APR stands for "annual percentage rate." It is a term that refers to the interest rate that will be applied to the balance on your card. It is usually expressed in a yearly rate.
Many credit card issuers offer an initial 0% APR, or interest-free, period. This usually lasts between six and twelve months. It can apply toward new purchases, balance transfers, or both. After the 0% APR period expires, a regular interest rate sets in.
What to Look For
Before you apply for a 0% APR card, you'll want to check some important details. First, find out what the 0% APR applies to. If it can be used toward balance transfers, you may want to bring a balance over from a card that has a higher interest rate. You can pay off what you owe during the introductory period. By doing so, you'll save a bundle in interest charges.
You'll also want to look at the time period involved.
0% APR offers are only valid for a certain amount of time before they expire. The exact amount can vary, depending on your credit history and score. In some cases, you may find a card that offers 0% APR for "up to 12 months." Take careful note of the phrase "up to." It usually means that only those with very good credit will receive the longer time frame.
More to Consider
In most cases, the 0% APR feature is very beneficial. It gives you a chance to bring over an existing balance and get rid of it, or make a new purchase and pay it off, interest-free. It can save you hundreds of dollars in interest in just a few months.
The 0% APR feature is not the only item to look for in a credit card, however. Be sure to consider the regular APR. When the initial interest-free period ends, this rate will set in. You'll also want to take note of any annual fees involved, other rewards offered, and the various finance charges.
If you plan to pay off your balance each month, the 0% APR feature may not mean as much. If you do regularly carry a balance, you might want to consider a credit card that has a regular low fixed interest rate. This will ensure that over a long period of time, you will not get bogged down with high interest payments.
For many consumers, the 0% APR credit card offers excellent benefits. Before applying for one, make sure that all of the card's features fit your needs and lifestyle. Once you get the card, take advantage of the initial interest-free period. Pay off an existing balance, or make a large purchase and pay it off over the next few months. You'll come out ahead, with plenty of change to spare.
Both Robert Alan & Stephanie Andrews are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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