Understanding 0 Apr Credit Cards
By Joe Kenny
A 0% APR is essentially a card offered by card companies to their consumers with an ‘annual percentage rate’ (APR) of zero percent. However, this rate does not exist forever, and after a period that ranges between three to twelve months, card companies begin charging higher rates of interest. Therefore, the major factors to be considered are the duration of the no-interest period, and what would be the APR rate after the offer ends.
Advantages of owning a 0% APR card:
Though 0% APR cards have a few catches, they can also prove to be advantageous for its users. The best way to assess these cards is by actually using one. If you pay off the monthly balance regularly, then the rate of interest will not be a major concern. Some of its main benefits are as follows:
- Cut down the interest rate: A 0% APR card is popular among users with heavy outstanding card balances. It helps them to slash the rate of interest incurred upon their debt.
- Travel benefits: A 0% APR cards offer travel benefits to its users. You could profit from this card if you travel by air frequently. Most companies provide bonus air mile benefits on APR cards. This could be as much as twenty-five thousand miles, merely by signing up and making your first purchase from this card. The travel facility could also be used for hotel rooms, meals and other additional alternatives. It also provides you with free gas discounts and rebates in purchasing a car.
- Cash back or reward benefits: Low APR cards also provide a system where you could get back a percentage of your purchases. You could get a reward of five percent for certain kinds of purchases you make.
- Paying off debt: Transferring your card balance that needs to be paid off to a new card with 0% APR would be a better money- saving solution, than holding on to the old card with a high rate of interest.
- Start up a new history: A 0% APR card can be used to establish a new history for a cardholder with a previous card debt. These cards curb the card usage, and initiate the necessity of spending within the budget. However, it might not be issued to people with a bad history.
Limitations of 0 percent interest APR cards:
A 0% APR card often comes with strings attached. Some of the major limitations are as follows:
- Usually, a 0% APR card offers the no-interest benefit for only a limited period, such as six months to a year.
- It might not allow you to transfer balances from high interest cards during the introductory 0% offer period.
- It could charge expensive fees for the process of transferring the balance.
- Some of these cards bear very high penalties for late payments, and automatically transfer you to an inconsistent APR rate.
- It often charges a very high interest rate once the initial offer period expires.
Therefore, although 0% APR cards may seem too good to be true, they do have a number of real advantages.
While these promotional offers by card companies are useful, they need to be taken up judiciously.
Article Source: http://www.articles-galore.com
Joe Kenny writes for the Card Guide, a UK cards site, visit today for introductory 0% balance transfers and start clearing card debt today.
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