How Does a Credit Card 0 APR Work? 8 Things You Need to Know Before You Apply for a Credit Card
A credit card 0 APR sounds like a very interesting deal, right? And you might be thinking about applying for one right now. However, how much do you know about this kind of credit card? Are you planning to jump into this thing blindly? Well, that certainly will not be the best decision that you can make.
Sure, the thought of getting a credit card with no interest for a long time is very intriguing. This is especially true if you are planning to pay off your debt or make a large purchase. However, you have to know that everything comes with a price. And this applies to 0% interest credit cards as well.
As you probably already know, credit cards will have terms and conditions that you need to pay attention to. And if you are not careful when you are reading those terms, you can fall into a financial mistake. That is why you need to be aware of all of the rules that these 0% interest credit cards make for their offers, especially if you are looking into a business credit card 0 APR.
Before you even think about applying for a 0% interest credit card, you have to know the basics about this type of credit card. And this includes how this type of credit card works. That way, you will be familiar with all of the terms that your future 0% APR credit card has for you. Of course, each credit card will have its terms. However, there are some basic ones that you need to pay attention to.
Without further ado, here are some of the most important things that you have to know about a credit card 0 APR. With knowledge of these things, you will be able to fully take advantage of the credit card that you are trying to apply for. Make sure to take notes on the points that we are trying to give you.
How 0% APR Credit Cards Work
First of all, let’s talk about how this kind of credit card works. As the name suggests, a 0% APR credit card will offer you no interest, whether for balance transfers and or new purchases, for some time. This period is known as the intro period. Typically, this period ranges from 6 to 21 months. So, you can find a credit card 0 APR 18 months or one that only has an intro period of 6 months.
If you decide to apply for a 0% interest credit card, you will be able to do several things without having to worry about interest for the duration of the intro period. Some of the things you can typically do are to make new purchases or do balance transfers. Some credit card only allows you to do one of those things or both without interest. And this can be a very beneficial thing that you can take advantage of, allowing you to feel like you have made the best financial decision.
Because this kind of credit card allows you to do balance transfers, you will be able to consolidate any credit card debt that you may have. You can transfer your credit card balance to another balance without having to worry about interest at all. That is essentially how a credit card 0 APR balance transfer works.
Aside from allowing you to pay off other credit card debts that you may have, a 0% APR credit card also allows you to make new purchases. This is a very beneficial feature that you can enjoy, especially if you are planning to make a large purchase. You can do all of that without having to worry about paying interest at all, as long as you make the transaction during the intro period that is stated on the terms of the credit card.
So, now you know the basics about how a credit card 0 APR works. However, that is not the only thing that you need to know if you want to make great financial decisions with this kind of credit card. Here are some of the things that you should understand before you plan on applying for a 0% APR credit card.
The 0% APR Period Only Applies to Certain Transactions
The first thing that you need to know is that the 0% interest period does not apply to every transaction that you make while using the credit card. As we have said before, some credit cards allow you to have 0% interest on new purchases, balance transfers, or both. This will be clearly stated on the terms and conditions of this kind of credit card.
Unfortunately, other transactions usually require you to pay interest. One example of a transaction that is not 0% interest is getting cash advances. That is why you have to remember to read the terms clearly before you apply for a 0% interest credit card.
Variability in the Length of the Intro Period
Next, you also have to know that the length of the intro period varies between credit cards. This length of period also varies based on the type of transaction that you make. For example, a certain credit card 0 APR 18 months might have an 18-months of 0% interest on balance transfers yet only a 6-months of 0% interest on new purchases. So, again, reading the terms and conditions of the 0% APR credit card is a very important step that you need to take.
Limits to Quality for No Interest
Another thing that you need to pay attention to is the qualification for the no-interest feature. As you probably already know, you will have a credit limit once you are approved for a credit card 0 APR. A credit limit is essentially the maximum amount of money that you can use to buy something using your credit card.
What you need to know is that you will be able to only spend up to the credit limit that you have when you are making a purchase, even if you are using a 0% interest credit card. The same thing goes if you are trying to complete a balance transfer.
Of course, the credit limit becomes even more important when you are trying to complete a balance transfer. Usually, a credit card will have a limit on how many portions of your credit card limit can be used for a balance transfer. And that is what you need to know about a credit card 0 APR balance transfer.
Possible Fee for Balance Transfers
Lastly, you should know that balance transfers might cost you an additional fee. Most credit cards will charge a fee for balance transfers. The fee varies between credit cards. However, it is usually around 3% per transfer. So, if you make a balance transfer of $5,000, you will be charged $150 as the transfer fee.
However, not all credit cards charge fees for balance transfers. You can find many 0% APR credit cards out there that have no balance transfer fees at all. But you should still consider this when you are trying to apply for a credit card. And that is what you need to know about the credit card 0 APR.
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