Best 0 interest Credit Cards for 2016
The best 0 interest credit cards offer the perfect opportunity to enjoy no-interest balance transfers and no interest of applicable purchases for a set limit (often 6, 12, or 18 months). If you are currently holding a credit card with a sizable outstanding balance, an interest-free credit card offers one of the most attractive options for lowering the monthly interest charges and getting back in control of the finances. Likewise, if you’re planning on making a one-off purchase, a 0% credit card makes it possible to make the purchase without being so concerned with extra costs. If searching the availability of this type of credit card, it is also crucial to establish the standard rate of interest that applies once the promotional period expires.
0% interest credit cards can help you save money by transferring high interest cards
Ways To Utilize 0% APR Credit Card Balance Transfers
“The most basic and practical use of 0% APR balance transfer offers is to pay down high interest credit card balances more quickly. If you have run up a large credit card balance that is carrying an interest rate of 8%, 14%, 17% or even higher, transferring that balance to a new card with a 0% rate can really help you to get a head start on paying down that debt. The danger comes when folks continue to use credit cards after transferring the balance instead of cutting it up or freezing it until all of the debt is gone.
I know people who have used 0% APR balance transfer offers in order to get ahead on larger loans like college student loans, home equity lines of credit, and even car loans. This use of the balance transfer can be a little tricky because the loan must be paid off or transferred to another 0% offer when the introductory period ends, otherwise you might be facing an extremely high APR at the end of the introductory period. For instance, if you owe $10,000 at 9% on your family car, you might be able to transfer that balance to a new credit card and reduce your interest rate to 0% for twelve or even eighteen months. By doing this, your payments will go 100% towards the principle for the length of the introductory period and you can make huge progress on paying down your balance. However, when the introductory period is over, your rate could jump up to a level much greater than 9% – unless you transfer it again or pay off the balance in time.
The best time to use a 0% balance transfer for this purpose is when you are close to paying off a particular debt – if you know that you can completely erase the balance during the introductory period.
Credit card arbitrage happens when a person accesses a large amount of cash through a 0% APR balance transfer, deposits that money in an interest-bearing account, repays the balance before the introductory period is over, and then pockets the profit. Because of higher balance transfer fees and extremely low savings account interest rates in the past couple of years, balance transfer arbitrage became unviable. The savings account interest rate needs to higher than the credit card balance interest rate in order to profit. When balance transfer rates are high, the only way you can take advantage is through riskier means like investing the money in the stock market, gambling, or using a peer to peer lending
There are many people who have been unable to save up an emergency fund. One interesting solution is to keep a little 0% balance transfer money in the bank to avoid borrowing more money when your transmission falls out or your child visits the hospital. In other words, if you have no emergency fund and your cash-on-hand is low, a rolling 0% balance transfer can be a low-cost way to handle a financial emergency – if you are disciplined. Do not spend the money unless it is truly an emergency, and make sure you pay off the amount or roll it over before the introductory period expires. This is money for an emergency, not for a vacation to Disney World!
For the next article in this series, I will give tips and techniques on how to access a 0% balance transfer line of credit and turn it into cash.
What are your thoughts on 0% APR balance transfer offers? Have you ever taken advantage of one?
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Benefits of Transferring Debt to Zero Fee Credit Cards
“Almost all zero fee credit cards start by eliminating annual fees required by the creditor to use their card. These fees typically help cover the cost of extra services provided by the card, including concierge benefits and monthly credit bureau reporting.
These fees can range from $5 to $100 annually, but are generally waived on a zero fee credit card to entice applications and spending. Almost all of the major creditors offer a zero annual fee credit card, including Chase, Discover and Citi.
While these types of credit cards can be enticing, it is important to read the fine details when applying. Some of the annual fees may come back after the first year, while others may require a certain amount of spending per month or year to waive the annual fee.
Another fee commonly waived in some zero fee credit cards are those associated with balance transfers. These credit cards allow users to transfer a certain amount of credit from one card to another. The major benefit is that the creditor will not charge a fee for the transfer. Most balance transfer fees can cost anywhere from 3 to 5 percent of the total amount transferred.
The main benefit of this type of credit card is that you consolidate debt at a lower interest rate without paying fees for the transfer. Theoretically, you will be able to pay more of the principal off per month and less on interest.
One of the important items in this type of offer is what the interest rate will be on the balance transfer. It doesn’t make sense to transfer a balance to a higher interest credit card.
Similar to zero fee balance transfers, many creditors offer new accounts or initial balance transfers for a certain amount of time with no interest charged. These types of credit card deals are great for a large purchase that can be paid off over an amount of time without being charged interest.
These cards are very popular at appliance and home improvement retailers, such as Home Depot, Lowe’s and Sears. Some cards are interest-free for up to 18 months, while others are only interest-free for six months. Most major creditors also offer these services.
Zero interest rate cards are a great resource for those needing to pay off a credit card within a quick period of time or pay for a major expense. However, these cards often come with a very high interest rate once the introductory no-interest period expires.
Although many of the zero fee credit card offers stress the waiving of extra fees, they do not skimp on the perks included in those cards. Anyone who has searched for a credit card knows that perks come in all shapes and sizes. From free airline miles to cash-back and even free gasoline for your car, there are plenty of options to satisfy every customer.
Capital One’s Quicksilver Card offers 1.5 percent cash-back on all purchases and does not charge interest until 2015. Neither does Bank of America’s Cash Rewards credit card, which offers 1 percent bag on all purchases, 2 percent on groceries and 3 percent on gas.. The point is that opting for lower or no fees does not come at the sacrifice of rewards.
Zero fee credit cards are a great option for all types of credit card users. No two cards will be the same, so do your homework, compile data and pick the rewards that suit your needs.