Wondering if it’s even worth it to apply for that 0% intro rate credit card? I was asked by several readers (using my contact form) if zero percent interest rate credit cards are legitimate. The short answer is YES, credit card offers from real companies are usually genuine but that doesn’t mean there aren’t a few catches.
What are the “catches” of a 0% credit card offer?
1. The zero percent rate rarely lasts very long.
Though these offers are sometimes offered for 18 months, most 0% introductory offers last 3 to 12 months after which time the rate increases. This is why it’s called a “teaser” rate. They tease you with the low rate hoping you’ll stay after it expires.
2. Zero percent doesn’t always mean zero percent.
The 0% intro rate that induced you to apply may not be the rate you actually get, but may be much, much higher. The lowest introductory rates are reserved for people with a pristine credit score. The actual score you need to get the 0% intro rate is usually spelled out in the terms and conditions of the offer. If it isn’t, call the credit card issuer’s toll-free number and ask. Be sure to get names and extensions of each person you speak with. Then get your credit score and decide if it’s worth applying.
Haven’t seen any introductory offers that interest you? CardOffers.com offers TONS of balance transfer credit cards as well as low interest credit cards for those with less than perfect credit. Give them a try.
How do I know if a 0% intro interest rate credit card is for me?
Read the fine print.
Read every single word. Every. Single. Word. You need to know how long the teaser rate lasts and how the company treats each situation it encounters (late payments, disputes, etc.). All things being equal, the longer the low rate lasts, the better off you’ll be financially since more of your payment will go to debt reduction rather than interest payments, even if it’s just for a short period of time.
Know the fee structure.
Balance transfers usually have a fee associated with them, somewhere in the 3 – 5% range. That means an $4,000 balance transfer will cost you an additional $120 to $200. It’s usually added on to your balance. If you’re paying more than that in annual interest rate charges with your current card, a 0% intro rate balance transfer may make a LOT of sense.
Know your credit score.
A lot of people have made it a habit to transfer their credit card balances from card to card to card. Though you may save in the interest charges, chances are very good that you’re paying a lot of transfer fees and that you’re doing considerable damage to your credit score. Why? Your credit score gets dinged every time there is an inquiry based on an a credit card application and you’re probably canceling older cards. Transferring your credit card balance is a great tactic to use but don’t overdo it.
If your credit score is already low, carefully consider whether you should apply for a new credit card, even one with a low intro rate. You probably won’t get the lower rate anyway and you’ll only hurt your credit score in the long run.
The bottom line
There are still a few cards out there that will give you an introductory rate of 0% on new purchases AND balance transfers, despite the changing credit market and the CARD Act of 2009. There’s no reason you should settle for less!
Resources to help you find that 0% credit card offer
CardOffers.com – they maintain a HUGE database of the best credit card opportunities to get either a zero percent rate or a very low one.