5 questions to ask about 0% card offers
They're called '0% promotional balance transfers,' and they can save you money -- or they can drive you deeper into debt.
This post comes from Jason Steele at partner site Money Talks News.
When you're mired in credit card debt, it's tough to make a dent in your balance when you're paying double-digit interest rates. And if you're still clinging to a good credit rating, you'll be tempted by the 0% balance-transfer offers that are flooding your mailbox.
While zero is always a great interest rate, there has to be a catch, right? In fact, there are several. Before you sign up for a promotional balance-transfer offer, ask yourself these questions:
What's the balance-transfer fee? In almost every case, credit card issuers make you pay a balance-transfer fee before you can take advantage of their 0% promotional financing -- and they say as much in their terms, if you read them closely enough.
A report this month by Smart Balance Transfers says, "Average 0% credit card balance-transfer fees increased in March from a multiyear low of 2.95% back above the 3% mark." That's just the average. Some cards are now charging as much as 4% or 5%. I could find only one card not charging a fee. (Post continues below.)
What's the length of the 0% financing offer? The second most important aspect of the balance-transfer promotion is: How long can you enjoy the 0% interest rate? Fortunately, the average length of 0% balance transfers has been rising. According to Smart Balance Transfers, these offers now average 12 months. So if a card has less than a year of 0% promotional financing, you should look elsewhere.
Is the 0% on just balance transfers, or are new purchases included? This is a critical detail that must be understood before you apply for any offer. Some 0% promotional offers apply just to balance transfers, just to new purchases or both. Having 0% financing on new purchases can save you a lot of money -- but not if it's an incentive to incur even more debt when you should be paying off your balance.
More on Money Talks News and MSN Money:
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Tired of your wallet taking a beating at the grocery store? Here are some creative ways to save big on food costs.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'