One way you can speed up your debt repayment process is to take advantage of 0 interest credit card offers. 0 interest credit cards allow you to make payments on your principal, without having some of your monthly payment diverted to interest. This can help you get rid of your debt faster. When comparing 0 interest credit cards, here are a few things to consider:
Length of Introductory Period
When choosing your 0% APR credit card, you need to make sure that you are getting the best possible credit card. The introductory period becomes critical. Many credit cards offer intro periods of six months or nine months. However, some credit card issuers are starting to offer longer introductory offers, including 12 month and 18 month options. (If you are in Canada, you can get low-rate cards with intro periods that last years — but no 0% credit cards.)
Before you decide on one particular 0 interest credit card, check to see if you might qualify for a card with a longer introductory period. This is especially important if you have a higher amount of debt. You might need a little more time to pay down your debt, and the longer your intro period, the less you pay in interest.
Balance Transfer Fee
Before you get excited about your 0% APR balance transfer, consider the fees involved. Many credit card issuers will charge you a fee of between 3% and 5% of the total transfer amount. If you transfer a balance from three different cards to your new card, you could be charged that fee three times. Usually, the fee is added to your balance.
Run the numbers. If you have a six month intro period, and the balance transfer fee is 5%, it might actually cost you more in the long run (if you can’t pay off your debt during the intro period) than keeping your money where it’s at. Some credit issuers won’t charge a balance transfer fee if you provide the account numbers when you apply. This can be very helpful, and save you a bundle.
Regular Interest Rate
You should also consider the regular interest rate. If your interest rate is going to jump to 19.99% after the intro period ends, that could be a problem — especially if your intro period is short and you paid a balance transfer fee on top of it all. Check to see what rate you are likely to end up with. The better your credit score, the more likely you are to have a lower “regular” credit card interest rate.
Qualifying for 0 Interest Credit Cards
Realize that you might not qualify for every 0% APR card out there. In some cases, the qualifications for 0 interest credit cards can be more stringent than you might imagine. You could be rejected when you apply. It’s important to be careful as you apply, since multiple applications in a short period of time can result in a lower credit score — and can increase the chances of being rejected on your next application.
Know your credit score ahead of time, and have an idea of what you realistically qualify for in terms of credit card offers and possible limit. Then, if you think you qualify, you can apply and use the card as a tool to reduce your credit card debt.