Most credit cards charge interest rates that would seem quite high if they were applied to any other form of loan, from 9.9% to 29.9%, yet some go to the other extreme and offer a 0% intro APR, or annual percentage rate. Why is there such a disparity between these high and low credit card interest rates, and what benefit can you, the consumer derive from it?
It’s important to remember that no credit card company is going to let you have a credit card without paying interest at all. The 0% intro APR is a technique, a promotion designed to lure you away from other credit card companies and to make you a customer. It’s a business decision, an investment—they sacrifice a little bit of interest income now in order to make up for it later. However, that doesn’t have to be a bad thing for you; in fact you can use it to your advantage in several ways.
The most common and helpful use of a 0% into APR is a balance transfer. If you have a credit card with a high balance, chances are the balance is growing, not decreasing every month, because of the high interest rates discussed above. But even if your card has a comparatively low interest rate, say 9.9%, a lower percentage is even better. The benefits are even more dramatic if your card has a high but typical rate of 17% or 18%. A 0% intro APR allows you to transfer your old, high-interest balance to a new, no-interest card, and to pay it off during the 0% intro APR period.
Another popular use of the 0% into APR is for purchasing big-ticket items. If there is something expensive you want to pay for—perhaps a vacation or a new computer—you can charge what you need to charge, then take advantage of the introductory period with no interest to pay off the purchase without paying the high interest such purchases would usually incur. It is essentially a free loan, if you are able to pay it off during the terms of the 0% intro APR.
The 0% intro APR is a tool used by the credit card companies to bring them profit, but you can benefit from it, too. You can use it to minimize the amount of your money that goes to the credit card companies, and maximize the amount that stays in your pocket.
Balance transfers offer consumers a great way to save on expensive credit card interest payments. If you have a sizable credit card balance with a high interest rate, you should consider transfering this balance to a new credit card and pay NO INTEREST on the balance you transfer for a year or more!
Typical balance transfer offers include a 0% interest offer for a limited number of billing cycles. After the introductory rate expires, an ongoing market rate applies.
2. Check out our top offers and choose a card that is right for you.
3. Follow the links provided and apply online.
4. Once approved, often instantly, your new card will pay off the balance of your old card, and this amount will appear on your new card at the introductory low rate!
Balance Transfer Wizard
American Express
