Interest Free Credit Cards Offers – How To Find The Best And Avoid The Rest
In these tough economic times, it is imperative that you manage your credit debt wisely and cut interest expenses as much as possible. Where you have several large credit card balances, you need to consider carefully reviewing your credit debt to determine if credit card debt consolidation is a smart financial move for you. Let’s take a look at the factors that you should consider when you consolidate credit card debt.
Interest Free Credit Cards: A Smart Way To Consolidate Credit Card Debt.
One of the most popular moves that consumers use for credit card debt relief to take advantage of interest free credit cards and their balance transfer options. 0% balance transfer credit cards can save you $150 to $200 for every $1,000 owed (assuming your high interest credit card rate is around 15-20% APR.). If you carry a large balance on one or more credit cards, a smart balance transfer can create significant savings.
How To Evaluate Interest Free Credit Cards
When evaluating multiple 0% interest credit card offers, you should apply for credit cards with the longest interest free period and the lowest overall balance transfer fees.
Understand that, in these tough economic times, you will have to have an excellent credit score to get the best 0 interest credit card deal. On the other hand, interest free credit card offers are still available to people with average credit ratings with higher balance transfer fees and shorter interest free terms. So, don’t give up trying to consolidate credit card debt.
Do Not Overlook The Impact Of Balance Transfer Fees
Until recently, the standard balance transfer fee on an interest free credit card offer was 3%. That made a 0% APR credit card offer (with an interest free period of 12 months) have an effective balance transfer APR of 3%. However, if the 0% APR credit card offer only lasts 6months, the effective balance transfer interest rate doubles to 6%. Recently, several credit card companies have increased the balance transfer fee to 4%.
So, keep that in mind when you evaluate multiple 0 interest credit card offers.
Also, even though there are still a few credit card issuers that cap their balance transfer fees at $50 to $75, many credit card companies are removing those caps.
How About An 0% APR Interest Rate On Purchases?
Many interest free credit card offers also have a 0% APR on purchases. This is a significant benefit so long as the interest free term is the same as for the 0 APR balance transfer offer. If the 0 interest APR expires before the 0% balance transfer offer period, do not use the card for purchases.
Remember, credit card issuers apply payments to pay down the balances with the lowest interest. If the interest free period expires prematurely, the purchases would accumulate at the standard purchase APR rate (which could be as high as 19.99% APR). So, you would not even begin to pay down this balance until all of your 0% APR balance transfer was paid in full.
Does The Interest Free Credit Card Offer Extend To Cash Advances?
If your interest free credit card offer extends to balance transfers as well as direct deposits into your checking account, you have the option of using the 0 interest credit card for other things, including, but not limited to, paying down other unsecured personal loans.
When In Doubt, Be Able To Bail Out
Have an exit strategy in place before you take advantage of an interest free credit card offer in case you are unable to eliminate the balance before the end of the 0 APR period. Otherwise, you could get stuck paying high interest rates on any outstanding credit debt balances. This will quickly undermine the interest saved during the interest free credit card period.
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