If you are lucky enough to be receiving 0% credit-card offers, you can use these offers to your advantage. However, be very careful to read the fine print because 0% often does not mean that you pay absolutely nothing. There are typically conditions to the 0% offer, and if you do not follow the conditions, you could end up paying a very high interest rate. Nevertheless, there are many ways to use a 0% credit offer to your advantage.
Conditions of the Offer
Check the terms and conditions of the offer. Credit card companies typically will offer 0% on purchases (old and/or new), cash advances, and balance transfers. However, just because a credit card offers 0% interest does not mean that it is completely "free." In cases of cash advances and balance transfers, there is usually a fee that the customer must pay upfront for the services.
0% on Purchases
Credit cards that offer 0% on purchases usually mean any NEW purchases. Thus, if this is an existing card, any old purchases you have made do not receive the 0% offer, and it is advisable to pay off all old purchases completely before taking advantage of the 0% offer. However, in most instances, you received the 0% when you open a new account, so you do not have to worry about old purchases. The 0% offer lasts anywhere between 3 months to 12 months. There are offers of 0% lasting longer than 12 months, but they are rare, especially in today's market. Moreover, while some cards are "no interest, no payment," where the customers do not have to pay a minimum payment every month, most cards require customers to make a minimum payment every month in order to maintain the 0%. Thus, it is essential that you pay the minimum balance each month, or your interest can suddenly jump to a very high rate.
0% on Cash Advances
A cash advance is when the credit card loans you money, at a certain rate. This is usually a very bad idea since credit cards will charge a much higher interest rate than a bank would for a loan. However, if a credit card is at 0%, you can certainly take advantage of that interest-free money for as long as the offer stands. If you decide to take advantage of the cash advance offer, make sure you find out what fees are charged. Most credit cards charge a 3% processing fee, up to a certain maximum. This means if you decide to do a cash advance of $1,000, the credit card company will charge you $30. In this scenario, the 0% cash advance actually carries an interest rate of 3%, assuming the 0% rate is for a period of 12 months. If the 0% offer is only valid for 6 months, then you are paying 6% interest for that $1,000 cash advance. Further, it's essential to pay back the cash advance before the 0% offer expires. This is extremely important because if you do not, the interest will jump to a much higher rate once the 0% offer expires, and you could end up paying hundreds of dollars in interest.
0% on Balance Transfers
A balance transfer occurs when you transfer your balance from one credit card to a different credit card. This option makes sense if you have a balance on a credit card that carries a high interest rate and you want to transfer that balance to the credit card with the 0% offer. Before doing this, find out what fees are charged. Most credit cards charge a 3% processing fee, up to a certain maximum. For example, if you transfer $1,000 from another credit card to the 0% credit card, you will be charged $30 for the transaction. Again, this means you are still paying a certain amount for this service, and it is not actually "free." Finally, as in the case above, you must pay back the balance transfer when the 0% offer expires. If you do not, the interest will increase to a much higher rate once the 0% offer expires and you could end up paying lots of interest.
Shop and Compare
To find the credit card that best suit your needs, shop and compare. There are many sites that help you compare credit cards and pick the best one for you. Creditcards.com (see Resources) is a good option.
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