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.
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