Which Is Best? A 0 APR Credit Card Or Low Interest Credit Card?

Even in these tough economic times, you can still find 0% APR credit card and low interest credit card offers that offer a 0 credit card rate or low interest credit card promotion. It is easy to become confused when all of the 0% APR/low interest credit card offers seem to include the same features.

Let’s take a look at some of the factors that will allow you to take advantage of the best 0 interest credit card offer.

Choose Between 0% APR Introductory Rate Or Lowest Fixed Rate

Most of these credit cards will offer either a low interest rate for the life of the balance or a 0% introductory interest rate for a fixed period of time. If you are really lucky, they will offer both.

So, which is more important, getting the low fixed interest credit card or a 0% credit card for a shorter period of time?

Well, it depends…

When A 0% Credit Card Is Right For You

If you’re transferring an existing credit card balance, a longer 0% APR credit card is almost always the best option. You will not pay interest on the balances that are transferred so you should save money (depending on the length of the 0 APR credit card rate and the amount you transfer).

Be careful of the transfer fees though. These can range from 3-4% of the balance transferred. So, you need to calculate the effective interest rate of the fees on the balance that you transfer.

Note that a 0% credit card is also a great plan for charging purchases initially and paying them off before the 0% APR period is over.

When A Low Interest Fixed Rate Is Right For You

If you are planning to pay off long-term purchases or do not need to transferring other balances, then a low fixed interest rate credit card will be a better choice.

Remember, you still might be able to have the best of both worlds if you can find an offer that provides both a 0% APR introductory rate and a low fixed rate thereafter.

Factors: 0 APR Or Fixed Interest Credit Card

Here are the most important factors that you need to apply when deciding whether a 0% APR credit card or low, fixed interest credit card is right for you:

0% APR Introductory Time Period. Look for the card with the longest introductory period. The typical length is anywhere from 3 to 12 months. If a 0% APR offer is available and all other factors are equal, consider it first since you’ll save the most money during the intro period. But watch out for balance transfer fees.
Fixed Rate After The Introductory Period Is Over. What will be the APR after the introductory period is over? Check to see whether or not there are different APR rates for cash advances and new purchases. The credit card with the lowest interest rate will save you the most money over the life of the loan.
Credit Card Fees. Is there an annual fee or other fee associated with the credit card. Most important, what is the balance transfer fee for any balances that you may wish to transfer. Sometimes, the size of the balance transfer fee coupled with a short introductory rate can effectively nullify the benefits associated with a 0 interest credit card.
Grace Period. What is the length of time from the date of a purchase until interest is actually charged. The average length has shrunk to about 20 days. Don’t worry about this factor if your primary goal is to transfer a balance. However, all other things being equal, pick the card with the longest grace period.
Rewards. Do you get airline miles or free hotel rooms? If you can take advantage of these rewards, they can really add up.

Look For 0% APR Credit Cards Whenever Possible!

The interest savings could be huge. But make sure you have a good credit score before you apply. Credit card companies will scrutinize your credit report to determine if you can qualify for a 0% APR credit card. Obviously, the better your credit score, the better your rate will be after the introductory period.

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