What are 0 APR credit cards?
The processing of loans takes time, and the increasing interests make a bad case for loan applications. If you have added liabilities, then it becomes even more difficult to procure a loan. It is at this point that credit cards fill the gap in the financial market.
They save you a lot of time and energy required to apply for a loan. But why should you apply for a credit card if you still need to pay interest on the loan amount? That’s what 0 APR credit cards are for; they offer you credit at 0% interest.
If you are thinking of big investments, you cannot afford to increase your costs by way of interest. You can even transfer liabilities to the 0 APR credit cards and end up saving money.
However, the caveat here is that you should not be dazzled by the 0% interest rate. You should have a good understanding of your current financial position. This way, you will be able to calculate whether the promotional period of the card will be beneficial to you.
You also need to have a good evaluation of how good the deal will be when the 0% promotional period expires. So, let us look at the process of choosing the best free credit card currently available, and interpret the implications.
A Clear Understanding of Your Aim
At the very outset, you need to have a clear vision of what you need the credit card for. APR stands for annual percentage rate. During the promo period, this rate will stand at 0%. A free credit card often comes with perks like a 0% transfer rate.
This policy encourages people to transfer their past liabilities to the current card. Cardholders also take on new liabilities with these cards. When this period ends, you will need to pay an interest rate. Whatever is the rate, divide it by 12 to get your monthly interest rate. Now you have two things to consider:
· Will you be able to carry the responsibility of this interest rate?
· Is this interest rate lower than the rate you were initially paying for your added liabilities?
You should go for the 0 APR credit cards only if the answers to both these questions are a firm “yes”. Furthermore, this card is very different from a deferred interest card that just defers the interest to a later period. The 0 APR credit cards waive off the interest for the said period.
Calculate the Period of Credit
It is best to calculate the risks and benefits together before you opt for a loan of any kind. Most 0 APR credit cards offer a promo period ranging from six months to two years. While longer periods are good for a current loan, it is bad for loan transfers.
For the latter, the transfer fee might increase by a considerable amount. So, you need to calculate accurately the time by which you will be able to close the transaction. If you find that the transfer fee you are paying is significantly less than the amount you need to pay, go for the transfer.
You should do your due research before applying for a particular card. It is difficult to know the credit limit before your application is approved. It does no good later to find out that the credit amount is less than your needs. So, a serious market survey is required based on the benefits before you choose your card.
Weigh Other Benefits
Oftentimes, people are too impressed by the zero interest rhetoric. This indiscretion might lead to missed opportunities. You need to make sure that the set of perks and benefits offered by the card are of use to you.
Keep checking different cards for these benefits, and choose the one that ticks most of your requirements. Additionally, check once again if the higher percentage of interest, later on, is outweighed by the period of interest waiver. As a responsible debtor, you should consider that concern at every stage.
Are the Monthly Dues Feasible?
You must pay the dues every month on time. This point can only be ensured by a steady flow of income. Ask yourself if you will be able to take up this fixed responsibility, along with other expenses. If you can afford it, you can definitely go for the card.
However, you should keep in mind that if you fail to pay the dues on time, you lose the 0% interest offer. That could upend all calculations. The best way is to employ the auto-payment feature with your bank to ensure timely payment. You should read the offer documents carefully, and make sure you have taken care of all the details.These are the points that you should never ignore while you apply for 0 APR credit cards. Financial responsibilities need serious deliberation, and you should be prepared to do the required groundwork.