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Credit cards can be helpful products when you use them appropriately. The key to any credit card is realising the limitations they possess and using them accordingly. We will examine what it means to have 0 APR credit cards and how you might want to use them.

0 APR credit cards can work in three ways: balance transfers, purchases, or both. We will explore all three methods where you can have zero APR on a card. First, balance transfer credit cards that are also 0 APR credit cards provide an introductory 0 per cent interest rate for a specified period of time. This may be anywhere from 3 to 24 months. The average 0 per cent APR on balance transfer credit cards is between 6 and 15 months. This means you have a set monthly term where you will not pay interest for any balance you transfer to the card. You have to transfer the balance within the first 3 months of opening the account with most of these cards. After this time period of transferring is over any other transferred amount will have the standard APR. When the introductory period is over you will pay interest, unless you have paid the card off in full.

Purchase cards work the same in which you have a period of 3 to 24 months of an introductory 0 APR for purchases. Any purchase you make on an introductory deal like this will not be charged interest until the monthly term is over. Most purchase rate deals are 3 to 12 months as an average length. Very few go beyond six months. If you pay the card off in full before the end of the term you will not pay interest on the purchases. If you make new purchases you just have to pay them off before the grace period ends.

When you have a card that offers both purchase and balance transfer introductory deals, they work the same as the individual options. The difference is that you may have a shorter period for the purchases than the balance transfer, making it slightly less appealing to use the card to make purchases as you will eventually pay interest. Most credit cards make you pay the lowest accruing interest balance first.

To use these cards effectively, you have to understand the limitations. If you cannot pay the balance off in time when the balance transfer deal is over you could switch to a new credit card deal or you pay interest on the amount that is left over. If you have the same length of time for purchase and balance transfer deals then you might consider using it as a purchase card if you know the entire balance can be paid off in time.

The beauty of 0 APR credit cards is obtaining a card that allows you to pay down your cards without spending interest in doing so. You get to pay the card off quicker as you pay to the principle balance only.

Filed under: Credit Card Deals by Admin JHS