0 Interest Credit Cards

0 Interest Credit Cards - What You Need To Know

You've probably seen all the adds and offers for 0 interest credit cards, but are they for real or are they just another clever scam by credit card companies to get you through the door? Well, for the most part these zero interest cards are the real deal, but where most people fall flat on their faces is when they don’t understand the terms and conditions of these cards. Its no surprise really because if you look at the terms and conditions its usually just pages and pages of fine print and no one ever reads that stuff, right? Fortunately the FTC acted on that and all cards now have to have a simplified disclaimer that gives you the main “features” of a card.

0 Interest credit cards can be a great thing is (and only if) you are a good manager of money. Think about it this way: a zero interest credit card is like a free loan. Its money that you are being loaned without being charges any interest. If you can get a $20,000 limit on your card and it has a 12 month no interest on it, that is indeed a very good deal. In fact, its so good that back in the late 1990’s many real estate investors used these cards to buy properties.

The one thing about credit cards companies is that they are constantly looking for new customers. Every customer means more money to them and they are all to keen to give away cards. With the fierce competition they have all sorts of incentives to get new customers. Some offer frequent flyer points while others offer gift card rewards or even cash incentives. Zero interest offers are just one of those incentives.

The “catch” is that the no interest period is not indefinite. It varies from 6 to as much as 18 months after which your rate will automatically revert back to the standard interest rate – which is high. Make no mistake about that. The plan for credit card companies is to give you the grace period to load up and spend. Then, when your card is filled up, you have to start making your repayments and they start cashing in.

To use a no interest credit card to your advantage you simply have to make sure that you spend and repay the balance within the allotted no interest period. Its as simple as that. If you can do that, then the bank is giving you free money.

How To Use Balance Transfer Credit Cards

Today there are countless types of credit cards with so many different features and “promises” that its hard to keep track of them all. One type of card that is of particular interest is the so-called balance transfer credit cards. They are basically incentives from banks to get you to transfer your credit card balance from one bank to another. This is a strategy for them to gain new customers and to do this they usually offer an incentive.

In most cases the incentive with balance transfer cards is that they will give you a grace period that is interest free, In other words if you transfer your balance to them you don’t have to pay interest on the balance for a set period – usually 12 to 18 months. This can be a massive benefit to you if y are stuck with excess credit card debt and can be a real lifeline if you can learn to manage it properly.

Suppose you have 2 credit cards, each with $5,000 of debt. Suppose your repayments are $200 per month per card just to cover the minimum. Now, if you just pay the minimum every month it can take you forever to pay off the debt. In fact, you will never pay it off if you only cover the minimum payments. Suppose you can roll 1 card’s debt into an interest free credit card that allows you an 18 month no interest option. What you can do now is to make additional payments on the exciting card and if you are clever you can pay it off while the other card is still in the interest free period.

This is a great strategy for paying off credit card debt but you have to be extremely diligent and be a good manager of money. Don’t use this interest free card to spend more! If you use it to get ahead and pay off your debt then its actually a good thing. Make sure you read all the terms and conditions of the new card. Usually there are some very strict guideline and if you break any of them you will lose your no interest grace. These cards tend to have quite high apr’s so you need to make sure that when your rates revert back after the initial 12 to 18 months that you have cleared as much of your other debts as possible.

Many people have wipes out their credit card debt in a couple of years by just rolling over cards from one no-interest card to the next. Banks don’t really like this but if you can do it and keep your payments up it won’t hurt your credit score or affect any of your ratings.

How To Use Credit Card Comparisons

These days there are a lot of credit card comparison websites all over the internet. Its become a big business – to the point where credit card companies are actually paying some of these sites incentives to give them better ratings. It’s a minefield and you have to tread carefully. For the most part, these credit card comparisons are great because it gives you all the latest cards side by side and allows you to quickly assess what your options are.

When it comes to applying for a credit card, then you need to know that every card is different and even ever offer is different. Getting a credit card is like getting a loan and it comes with strict terms and conditions that you really need to understand. Credit is tightly controlled by the government these days and lenders have to adhere by strict rules. No one can “scam you” because they are forced by law to disclose all their “fine print” up front.

So, what are the most important things to look out for? I think the most important thing to look at is the overall offer. What are you looking for? Do you need an interest free card, do you need a balance transfer card or do you just need a low APR card? Every card has a unique benefit and depending on your specific need you should start your search there. Next, I will always look at the default APR. This will be the percentage of interest that you will be charged. This is especially important if you are looking at so-called interest free credit cards since they always default to a standard rate after a set period of time.

The next thing you need to look at is the time frames. If it’s a special offer card it will have limitations on how long the offer will apply. If its an interest free card, then how long does the no interest period apply. If it’s a balance transfer, then how long before it reverts back to the full rate? If it’s a cash back card, then how long does the cash back offer apply?

Fees is the next most important thing to look at. Regardless of how great the offer may sound, there is always fees that apply. Many balance transfer credit cards have very high fees involved with transferring the balance and some charge fees for moving the balance in and out so just rolling over the balance can be expensive.

When you compare credit cards side by side then these things are easy to weigh up against each other. Don’t just look at any 1 feature of a card. Look at it all and decide what’s best for you both in the short and the long term.

2 Ways To Use Credit Cards To Reduce Debt

If you are faced with excessive credit card debt, then you need to do something about is sooner rather than later. It’s a hole that can get very deep very fast. Looking into debt consolidation is definitely one option and looking into bankruptcy is another but there are usually 2 very extreme options that can have severe effects on your personal financial health.

Getting out of credit card debts is by no means an impossible task. Filing for bankruptcy might seem like the easy option but its not (or al least not anymore). All it really takes is good money management and the fact that you got yourself there means that you can get yourself out of it. There are 2 very “sneaky” tricks that can help you get out of credit card debt without making any serious changes to your current lifestyle.

The first golden rule is that you have to stop spending on your credit cards. Every cent you spend on your credit card will dig the hole you are in even deeper and because its on yoru credit card, every cent you spend can potentially be $1 of debt. If you rely on your credit cards for day to day expenses then that’s fine, as long as you DO NOT buy luxuries on credit. You need to limit the spending on your crds as much as possible.

The first strategy for reducing credit card debt is simply to apply for an interest free credit card and use that instead of the card that y are being charged credit on. This works great if you rely on your credit card for your living expenses and by simply getting an interest free card you can save a fortune in interest charges. Its critically important though that once you get the no interest card that you use the savings towards paying off the other card. The interest free period won’t last forever, but it will give you 12 to 18 months to help you pay off the debt on another card.

The second way to do it is to transfer your balance to another card. Credit cards vary greatly in their charges and features. If you start shopping around you can pick up some great deals. Many balance transfer credit cards give you a grace period that is interest free. Again, this can allow you to save on your interest payments and allow you to pay off your debt with these savings.

The simple fact is that credit card companies want you to spend. If you don’t then you can use their offers to your advantage and with a bit of intelligence and good management you can use it to eliminate your debts.