0 Annual Percentage Rate or 0 APR
is the latest buzzword in the market. With the immense competition within the credit card industry 0 APRs are here to stay. APR is basically added to your credit card bill when you do not repay your debt within the grace period. Lets assume your card has an APR of 17.9%. This APR will be split into 12 monthly APR payments of 1.5 %. This will be levied each month until the debt is paid along with additional charges.
A 0 APR card
has certain benefits like a 0% introductory offer, cash back, and affiliations to various charities. By 0 APR it means that if you dont pay your total credit card bill at the end of the month, you can avail of no interest charged, while paying the amount back.
Of course this is only for a certain period of time (usually 6 to 8 months) or as specified by the credit card company. For the spenders amongst us, this is a really good option. Even for balance transfer
; if youve accumulated a large amount on a certain card, it may make sense to transfer it at 0 % to another card
. A note of caution here; Ensure you have checked what the APR is going to be, after the specified period ends on the new card. It may just be at a higher interest rate.
Some things you need to look out for when going in for a 0 APR card. Assuming you have made a purchase of $1000 and want to spread your payment in 4 equal installments of $250. You can do so and save some money. But make sure you pay your money on time. Because your card may have a penalty clause, if you fail to pay or make late payments on your credit card balance, you maybe charged a penalty. In some cases the credit card company may even renege on the 0 APR card. But the charges themselves are quite high. If you are even a day late, a charge of $25 or more can be levied on you. Also in some cases, it maybe necessary to pay your debt before the specified period ends or a default interest rate gets levied. The best thing is to make sure you have read the fine print before opting for a 0 APR card. Dig in the details of the fine print, to come up with a list of potential hidden charges. Ask the credit company about potential hidden charges (your answer to that question may be a smile and the standard answer about the company not having hidden charges, but at least you tried). Ask long time users of the same card about potential hidden charges, and only then make an informed decision.
Check out 0 APR credit cards