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Interest Free Credit Cards
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Isn’t it wonderful using a little plastic card that lets you buy things with money you don’t have at the moment? What would be better than that? How about an interest-free credit card deal that last and lasts. Many if not all credit card companies offer 0% credit deals for a time set period, usually 6 months, but if you play your cards right, you could treat yourself to a one-year, interest-free loan.
It’s very hard nowadays if you have good credit, not to have junk mail of any variety offering you a 0% credit-card. Why not take advantage of them, how about a closer look at the deals? “The 0% is a good way to hook somebody”, says Howard Dvorkin, president of Consolidated Credit counselling Services, “All the credit-card companies are having a hard time finding good, qualified people to lend money to”. Fierce competition amongst credit-card issuers for good credit consumers has forced them to come up with new ways to get you, the consumer, hooked onto their credit card. The result so far is super-long low rate periods to 0% deals on both purchases and balance transfers, and even 0% offers on cash advances. As good as this all sounds, you must pay attention to the details, it’s all in the fine print. Some issuers reserve the right to jack up your interest rate if you fall behind on your bill or with any other creditor. Pay late even once and that 0% rate could be gone for good. So before snatching up that 0% offer, grab a magnifying glass and pore over the fees, terms and conditions. Here are some key questions to ask as you comb though the offer: - How long does the introductory rate last?
- What is the annual percentage rate after the introductory rate expires?
- What does the introductory rate apply to, transferred balances, new purchases, cash advances or all of these?
- If not what are the fees and are they reasonable?
- What about the late-fees and over-the-limit fees?
If the above is looking good then great, but don’t get too excited yet. It’s also important to realise that not everyone qualifies for the 0% rate promised in the bold print, if you don’t you could end up with a higher introductory rate or no introductory offer at all. Let’s say you qualify for the card and it’s a great deal, you need to keep on your toes.
First, you need to make sure that any balances you transfer are 0%. Then while you are waiting for a balance transfer to take effect, which could take four weeks, it’s important to continue making those minimum payments on the old credit card. If the 0% introductory rate is on balance transfers only, avoid making any purchases with the card. Be very careful of product purchase interest rates though. Many credit card issuers have a strict policy of paying your lowest interest rates first; ensuring that your entire balance transfer will have to be paid in full before you pay a single penny on new purchases you make with your shiny new card.
So, bearing all this in mind, this is not the credit card you may want to take on your next trip to the high street, if you do, you may end up paying more in interest than what that cute little top cost!
You also need to be incredibly diligent about paying your credit card bills on time. One late payment and your 0% interest may be taken away. So, don’t chance it. “Typically, the tickle rates have fixed time periods, but if you screw up during the time period, the gloves come off”, Dvorkin says.
The best ways to avoid late payments is through a direct debit or standing order, or if you prefer to pay manually, make a payment a week before the due date, giving the payment enough time to transfer properly. Lastly, if you want to make the most of an interest-free deal, you’ll want to pay off that balance before the teaser rate ends. “There’s no easy way to get out of debt. You’ve got to be diligent about paying down debt, and you’ve got to do it as soon as possible because that way you’re paying the least amount of interest”, says brad Dakake, a consumer advocate. The Credit Card companies are betting that most people who land a 0% deal won’t pay down their debt, meaning that large balance will linger long after the interest-free period ends. “What they’re hoping is that there’s enough customers that move their balances and leave them there”, says les Riedl, executive vice president at Spear & Associates, a leading financial services/bank consulting firm.
Why not prove them all wrong, use the interest-free introduction period to get rid of your debt, at a lower cost to you and quicker than ever. Let the Credit Card companies make their money off someone else, while you take advantage.
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