What to Watch with Zero Percent Credit Cards

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  photo credit: cncpt

  Limited-time offers: Most zero percent credit cards will only offer the 0% interest rate for the first three to six months. After that time, the rate goes way up, probably right when you’ve started to build up a good balance. It costs the credit card company very little, but it will cost you a great deal.

• Required transactions: You might be required to do a minimum number of purchases or cash advances every month in order to qualify for the 0% rate. If you don’t, your rate will go way up.
• Penalty rates: Be careful, because if you make one late payment, go beyond your credit limit on the card, bounce a payment check, or even attempt to close your account, your interest rate will probably skyrocket to 20% or more.
• You can’t pay off higher-rate balances as fast: Most credit cards apply your payments to the lowest-rate part of the balance first. So if your transferred balance is at 0%, but then you made purchases at a higher rate, your monthly payments will first be applied to the 0% part of your balance, while the high-rate balance continues to build.

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