Do zero Percent Credit Cards really Save you Money

There can be no denying that 0% APR credit cards do save you money – but only if they are used prudently, wisely and in a manner which avoids the temptations which the credit card issuer will so subtly be placing in one’s path. There are very often some conditions attached to 0% APR credit cards which are not immediately apparent and the small print on the agreement should always be examined very closely.

The most common occasion when someone will find the lure of a 0% APR credit card attractive is when it is offered to them in terms of a balance transfer and they have debt outstanding on another card or cards, upon which they are paying what may be a very high level of interest. It is a fact that by transferring this debt to the 0% APR credit card, they will not accrue interest for a stipulated period of time on this balance. This time period usually varies between six and eighteen months.

What the credit card holder has to be very careful of in this respect, however, is in how they intend subsequently using their new card. If they intend to continue using the credit card facility and accumulating debt, it may not always be wise to switch cards.

It is almost always the case that 0% APR offers in this respect will apply to the amount of the balance transfer only. Very occasionally, it is applied to subsequent purchases during the period of the 0% APR agreement but this is not the norm. What subsequently happens is that when the credit card holder continues to use the card, any payments which they then make to the card will be used in the first instance to offset the interest free part of the balance. This means that interest will be charged immediately on the newly acquired debt, at what may very well be a much higher level than was charged on the card holder’s previous credit card account.

If the interest free debt is fairly insubstantial, this will quickly be repaid and the credit card account holder will find themselves paying a higher rate of interest on the full outstanding balance on their account each month. This clearly negates the benefits which they perceived themselves as receiving from the 0% APR balance transfer.

There are two ways in which the credit card holder can ensure that they receive the full benefits of the 0% balance transfer. They can either stop using their credit card altogether or they can keep their old card – where the standard interest rate is indeed lower – and continue to use it for all new purchases. Only in these two ways can the full benefits of the 0% APR credit card be realised.

Investigating the full terms of the agreement is therefore the key to ensuring that 0% APR credit cards do represent the savings which they claim and that they do not have a nasty sting in the tail further on down the line.