First Zero Interest Credit Card Transfers
Zero interest credit card balance transfers are a relatively new idea. Credit card companies implemented these programs due to the fact consumers have been demanding a way to delay paying interest on their credit cards. These cards make it possible for credit card holders to transfer existing balances with high interest to a zero interest card, make lower payments, and potentially get out of debt faster.
Credit card companies make money off these cards during the zero interest time period by charging fees per transaction. People often spend less money when there is a charge on every transaction they facilitate. Be aware that the companies issuing these cards are looking for consumers with a low risk of default, and will generally choose people with a credit score of 700 or higher. Those who have lower credit scores may still be issued the card at a low-interest rate, just not a zero percent interest rate.
There are several possible problems with these cards, an example would be that if you miss a single payment the interest rate can skyrocket to 15% or more. Always check what the annual percentage rate (APR) is on any new credit card. Find out what the go-to rate is after the introductory zero percent offer expires, it may be higher than the rate on your current card. Also, examine how much the credit card company charges you to transfer your balances. If you owe too much the credit card company may completely deny the transfer as well.
When searching for a zero interest credit card make a list of several different cards and what features, interest, annual percentage, rewards, and other fees each card carries. Make sure you pick a credit card with features that are suited to your financial needs. For example, if you take cash advances you will need a card with a lower annual percentage rate and lower fees on cash advances. If you pay your bill in full every month you will want to look for a card with no annual fee and a longer grace period.
Keep in mind that when you transfer your balances to a new credit card your credit score drops some for about a year. Every time a credit card company pulls your credit report to discern eligibility, your credit score dips. Beyond that, when you transfer balances to new card your overall age of accounts drops. When you close an account it reduces your amount of available credit, which also lowers your credit score.
If you are going to take on a 0 interest purchase credit card balance transfer, you need to do a substantial amount of research. Some credit card companies that offer zero interest as an introductory offer have unreasonably high interest rates later. These rates could potentially be high enough to land you in a worse position than you were in to begin with if your balance is not paid off at the end of the zero percent introductory period. Do your research, think through your options reasonably, then decide if changing cards is right for you.