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  Category: Articles » Finance » Article
 

Why Owning a 0% APR Card Could Spell Disaster




By Rebecca Spitzer

Almost everyone gets the offers in the mail for credit cards that claim to provide 0 percent interest. These offers are incredibly tempting, and on the surface they look like a good idea. You could transfer your outstanding balances, buy that big-ticket item you've had your eye on, and get free interest for up to a year. Sounds great, right? Well, beware because there are some hidden pitfalls with these cards that could spell disaster to your pocketbook and your credit rating.

· 0% APR is good for a limited time. Most of these credit card offers last for six to nine months, although some are good for up to a year. This means that you can transfer your balances and make purchases for one year with no interest added to your billing statement. However, at the end of this period, you will be charged interest that is calculated on your credit score and history, so don't get lazy and forget to check the calendar. If you buy a big-ticket item near the end of your free interest period, you may end up paying more interest on your credit card than you would have with in-store financing.

· 0% APR could be null and void if you make a mistake. There are stiff penalties on most of these credit cards that hold you to very high standards. For example, with some cards, if you are late even one day with your payment, you lose the 0% APR and are immediately moved to a penalty interest rate that can be as high as 24%.

· 0% APR could lead you to outrageously high interest. When the introductory period of free interest is over, you will begin to pay regular interest on your purchases and any outstanding balances. Be aware, however, that this rate may be much higher than you would get with another standard credit card. The average rates after the introductory free interest period is nineteen to twenty-one percent. So if you plan to transfer balances and pay them all off within a year, then go for it. But remember that if you have a job loss or medical emergency that keeps you from making a payment, you will be paying outrageously high interest from that point on.
 
 
About the Author
Rebecca Spitzer recommends Find Credit Cards for finding a 0% APR card. See http://www.findcreditcards.org/type/0-apr.php for more information.

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  Some other articles by Rebecca Spitzer
What's Your Credit Score? Not Knowing Could Cost You
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Why Credit Bureaus Are Ripping You Off…And How to Beat Them
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5 Cons of Owning a 0 APR Credit Card
If you have received an offer recently for a 0 APR credit card, you may have been very tempted to send in the form signed and ready to go. You may ...

5 Pros of Owning a 0 APR Credit Card
When you get the offer in the mail for a 0 APR credit card, you may be tempted to throw it out, thinking that it is too good to be true. But before you toss it in ...

Why Paying Your Income Taxes with a Credit Card Is a Rip Off
If you own your own business or have not been deducting enough from your paychecks each week, you will probably owe some income taxes when tax time rolls around. This ...

How Credit Card Issuers Use the Prime Rate
When you get a credit card offer in the mail that says you are pre-approved, what is the first thing you look at on the letter? The interest ...

  
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