This article will help you understand the basics of 0% Credit cards and the 0% Balance Transfer Credit cards and the 0% Purchase Credit cards.
0% Credit Card
A 0% credit card is basically an attractive promotional scheme released by credit card companies to get new customers. The idea is to get people into taking credit cards that initially do not have interest charges. The customers feel this to be a very positive incentive and therefore apply to these schemes. What they don’t realize is that a credit card NEVER remains at 0% as the income of the credit card companies are solely dependent on the interest charged. By the end of the day, customers are in for a rude awakening.
The period of 0% credit card lasts from six months to most probably a year, but never beyond that. There is one important issue to be aware of and that is when you purchase anything that does not come under the promotional deal of 0% it will have its accrued interest.
As it is you must always read the terms and conditions of the credit card companies carefully and understand the fact that if any of the terms are not satisfied, your promotional deal will be withdrawn. You will then have to pay extra interest over the balance owed. There is also another clause that states that if in any case your credit score goes bad (that is credit cards of other companies defaulted) then also your current 0% company can withdraw your deal and charge you interest. All these regulations may seem crude and it is hoped that there will be some amendments in them when new credit card laws will be imposed.
0% Balance Transfer Credit Cards
There is a 0% balance transfer promotional deal that applies only on balances that is transferred from other cards onto your current card. To transfer a balance, you have to give your account number and other information for the credit card company to do the transfer for you. The other way could be to have the creditor send balance checks. The checks will state the amount that you have on your account and you can use that check to pay the balance of any other loan.
Usually credit card companies charge a fee for balance transfers and that could range from $5 upto $100. Getting a 0% balance transfer will only help in the case of paying off other high rate balance interest. It would not in any way help if purchases are made on to that card.
Remember that just like 0% credit cards, 0% balance cards too have the same policy of interest on any purchase outside the promotional deal. So whatever payments you make will go to the 0% balance to pay it off, and there will be accrued interest charged on any purchase you make off the 0% card.
0% Purchase Credit Cards
Now this one has got to be a favorite for most people, as it offers 0% interest on whatever purchase you make within the specified time slot. But this is not so flexible as it seems, because mostly the promotional deal is just with selected purchases, and at stores that are collaborated with the credit companies.
For general purpose credit cards there are other companies that offer that scheme but with a much more limited time slot than that of the previous store specific card. For this scheme read the terms and conditions well and make sure that the creditor does not charge you back interest on the things that you purchase. Since this could be a little heavy on the creditors, you should watch your back too.
Conclusion
Its very important that you understand the pros and cons of the three 0% cards. You also need to identify which card suits your needs the best and that the cards should be used for their own specific category if you do not want interest charges. If you happen to use the cards in place of other things, you might just end up in heavy debts.
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