We’ve all been tempted by 0% credit card interest rate offers. These offers are usually for short periods of three to 12 months and there are usually conditions attached. For example, the preferential rate may apply to balance transfers, but not to cash withdrawals. The low interest rate may not apply to credit card cheques or purchases either.
People who are carrying a large debt will want to make the most of 0% interest rate offers. Here’s how to keep your interest rate at 0%.
Researching 0% Credit Card Deals
First of all, it is best to research the card offer thoroughly. Consumers need to find out:
– what period the 0% interest rate is for
– whether it is for balance transfers only
– whether it applies to other spending on the card
– what the rate is for cash withdrawals or credit card cheques
– whether there is a balance transfer fee
– what other incentives there are for using the card
Answering these questions will help consumers to decide which 0% card is right for them. It is especially important to pay attention to the period that the incentive offer lasts for. To keep paying 0% interest, consumers will need to apply for a new 0% card a month to six weeks before the old offer runs out. This leaves time to get the card, activate it and transfer the balance without incurring any additional fees from the current card company.
Rate Surfing Benefits
Moving from card to card, or rate surfing, is a common way of keeping interest rates low and paying off as much of a debt as possible. Using a 0% card means that any money paid is reducing the outstanding debt rather than paying interest. This is good news for consumers’ long term financial stability.
Of course, there’s no guarantee that consumers will be able to get another card. This will depend on their credit profile. The best way to maintain a good credit profile is to have some credit card debt (but not too much) and to make all payments on time. This will show card companies that you are a good credit risk.
Watch Out For Balance Transfer Fees
Card companies do not like credit card tarts, another term for rate surfers, because they lose hundreds of thousands of pounds’ worth of income that they would normally gain from interest. As a result, many credit card companies take their money up front by charging a balance transfer fee of around 2% of the balance transferred. Even with this fee, savvy consumers should be able to shop around for the best rates and pay much less interest than they would normally have done.
In addition to the incentive of a 0% interest rate, consumers can also benefit from other rewards. These include points that can be used for travel, earning vouchers, cash back and charitable contributions. This means that consumers can reduce their outstanding debt and gain a reward as well.