Whether a credit card can have a positive impact on your finances depends on how you use it. If you make the right move, a 0% annual implementation rate (APR) card can be beneficial. If not, you may regret signing up for years to come.
It will help you to know the potential benefits and disadvantages of these cards before comparing and choosing 0% APR credit cards. This not only lets you know your decision about which cards to get, but also helps you avoid avoiding more debt than you start by arming yourself with information.
The advantages of 0% Intro APR credit card
The main benefits of 0% Introduction APR Credit Cards are clear and avoid interest. However, other potential benefits are more subtle. Consider these pros before applying for a 0% interest credit card.
You will save money with interest
Credit cards with 0% Intro APR offers can help you save a significant amount of money on interest. This applies regardless, but especially when the alternative is a traditional credit card, given that the average credit card interest rate is currently around 20%.
Next, consider a 0% intro APR card with a 21-month intro period. If you pay $200 a month with such a card, you can eliminate your debt in 20 months.
For example, the Wells FargoReflect® card offers a 0% intro APR for 21 months from the opening date of purchases and qualifying balance transfers made within the first 120 days. After the intro APR offer is finished, 17.24%, 23.74%, or 28.99% Variable APR Applies to it. A 5% balance transfer fee of a minimum of $5 will be charged on all balance transfers.
Your monthly payments may drop
Saving interest may be your goal, but switching from a higher rate to a 0% intro APR will also help you reduce the required credit card payments each month.
However, don’t forget that after the Intro APR period ends, your credit card APR will return to your regular card fees. In other words, your monthly payment drop won’t last indefinitely.
You can pay off your debt faster
Paying zero interest on consolidated obligations with a 0% APR card directed towards balance transfers, also known as Balance Transfer Credit Cards, helps you repay your obligations significantly faster.
Every cent you pay for your liabilities goes directly to your main balance without adding interest charges to your invoice each month.
Your credit score can be improved
Using your credit card responsibly can help you improve your credit score. Paying off your debt can help you improve your score by lowering your credit usage rate and paying on time with your card. This is the most important factor in determining your FICO credit score.
Cons of 0% Intro APR Credit Card
There are many benefits associated with 0% intro APR credit card, but using the card incorrectly can lead to financial losses. The biggest potential drawbacks of using this type of credit card are:
New credit cards may temporarily affect your credit score
Applying for a new credit card will lead to rigorous investigations into credit reports and will negatively affect your credit score. However, don’t forget that the impact is temporary and minor.
Transfer fees can be applied to transferred liabilities
If you plan to consolidate your high profit obligations using a 0% intro APR credit card, you may be paid a balance transfer fee in the range of 3-5% of the transfer amount.
Paying this fee may be valuable in interest savings, but it is still important to understand that there is rarely any balance transfer.
Your intro APR period will not last forever
Zero percent interest offers are limited hours ranging from 12 to 21 months, depending on your card. Once the intro period ends, the remaining balance you owe will begin to earn interest at the normal variable interest rate on your card.
Remember, credit cards typically have a higher interest rate compared to other financial products, such as personal stock loans and home equity loans.
A zero percent interest offer can satisfy you
A zero percent APR credit card can be invited to carry debts because they know they are not interested in the purchase, the transferred debt, or both. This will make you feel complacent and help you pay less monthly than you need.
0% intro APR, especially credit cards that offer rewarding people, can even encourage you to spend more than you intend.
Conclusion
When used correctly, a 0% intro APR credit card can save hundreds of dollars on interest rates. If you get your card for balance transfers, it will also help you reach your debt payoff target faster. There are other benefits, such as additional consumer protection and revenue compensation. However, these cards come with regulations, such as confiscating a 0% intro offer if payment is delayed. There are also balance transfer fees ranging from 3% to 5% of each balance you transfer.
If you are disciplinary in using your card and are fully aware of both the top and the shortcomings, you can use one of the best 0% Intro APR credit cards on the market as a great tool to manage your personal finances.
