0 credit cards | How to Choose Interest Free Credit Cards

How to Choose Interest Free Credit Cards

If you want to reduce your credit card debt and eventually eliminate it, you can still find n interest free credit cards even in today/’s tight credit environment.  You will have to have a good FICO score even with the changes incorporated into the latest FICO 08 scoring system.

Use Balance Transfer Credit Cards To Get Low Interest Rates

Consumers once received balance transfer offers in the mail almost every month.  Fortunately, those with better than average credit scores can still find balance transfer credit cards that will allow them to transfer all, or some of their credit card debt onto the new card with a 0% APR interest rate.

You will have to pay a balance transfer fee of 3% to 4%.  While these fees were once capped at $50, some issuers have removed the cap or raised it to $75.  So, read the fine print before making the transfer.

Read The Terms And Conditions Carefully

When selecting an interest free credit card, it is important to read the terms and conditions on the credit card applications very carefully.  Here are the features and benefits that you should look for in selecting the best credit card:

Length of Introductory Period. The chief aim is to find a credit card offer with an  introductory rate for as long as possible.  Not long ago, the standard introductory period was 12 to 18 months.  Over the last six months or so, that period has dropped to as little as six months.  Compare credit cards and focus on credit card deals with the longest balance transfer period.  This will offset the negative effects of the balance transfer fee that will be paid when the balance transfer is made.

Interest Rate After The Introductory Period. You want to focus your search on those offers that involve low interest credit cards after the introductory period expires, particularly if you are not going to be able to pay off the credit card at the expiration of the interest free period.  Unless you select an offer with a low interest credit card, you will quickly offset any interest savings within a short period after the introductory period expires.

Balance Transfer Fees. At one time, the standard balance transfer fee was 2%-3% and capped at $35 to $50.  Recently, some credit card issuers have increased the fee to 4% and/or increased the maximum fee (or eliminated it altogether).  Ideally, the best credit card deals are going to be the credit cards with the lowest balance transfer fees particularly if the balance transfer period is shorter.

Method Of Calculated Balances. Ideally, you want to avoid credit cards that use the two cycle average daily balance method of calculating balances.  If you plan to reduce your balance each month, the two-cycle average daily balance method will penalize you by averaging the previous month’s higher balance with the succeeding month’s lower balance.  This results in a higher average balance and higher finance charges.

Introductory Period Begins When Balance Is Transferred. You want to find an interest free credit card that begins the introductory period when you transfer the balance, not when the account is opened.  If the period begins when the account is opened, you have the added flexibility of transferring balances at a later date if necessary.

Do Not Use Your 0 Interest Credit Cards For Purchases

Once you have initiated a credit card balance transfer, that interest free credit card is off limits for purchases.  Cut the card up and do not use it for purchases.

If you have credit card balances on other cards (with higher interest rates) make the minimum payment on the interest free credit card and pay the difference onto the credit cards with higher interest rates.

When, and if, you are able to pay off all of your higher interest credit card debt, then pay the extra money on the interest free credit card if you are able to do so before the introductory rate expires.

Pay Your Credit Card On Time, Every Time

In order to enjoy the benefits of an interest free credit card, you have to pay the bill on time, every time.  Most balance transfer credit cards have a default rate that is triggered when the bill is late.  This means that, instead of paying no interest, you will incur a steep penalty interest rate the moment you are late or skip a payment.  In addition, continue to pay the old creditor, until you have confirmed that the balance transfer was completed.  Do not trust the credit card representative to tell you that the balance has been transferred.

If you can remember these rules, you can probably still save a substantial amount of interest on your credit card debt, even in today’s tight credit climate, provided you have the FICO score to back it up.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

Filed Under 0 APR Credit Cards, 0 Credit Cards, 0% Interest Credit Cards, Interest Free Credit Cards | Leave a Comment

Tagged With , , , , , , , , , , , , ,

Comments

Leave a Reply