0% Credit Card Offers: Understanding the Fine Print

A steady stream of 0% credit card offers have likely found their way to your mailbox if you have a decent credit score. These can result in an interest-free loan for you if the offer is right and you use it effectively.

Have You Really Qualified?

The place to start evaluating the fine print on 0% credit card offers is whether the low interest rate is really being offered to you. Often, in the terms and conditions of the offer you will find the credit card company has reserved the right to issue you a higher interest rate card if, based on the application you submit, your credit history would warrant it.

Be certain you really have qualified for the 0% interest rate before you activate and use your card. Otherwise, you might be paying an even higher interest rate than you have on cards you currently hold.

How Long is the Low Rate in Effect?

Credit card companies are vying for qualified customers. That is why they offer incentives such as those found in 0% credit card offers. The goal is to land you as a customer with a low interest rate and keep you as a customer at a higher rate at a later time.

Typically, 0% credit card offers will stay at 0% for three, six, eight or even 12 months. It is important to know when the low interest rate expires so you can time your use of the card to it. You do not want to be surprised with a higher interest rate, and therefore with higher monthly payments, on purchases you planned to finance at 0%.

What Qualifies for 0%?

A primary advantage from 0% credit card offers is the ability to transfer an existing credit card balance, one with a higher interest rate, to the new card. In effect, you now have an interest-free loan for as long as your 0% rate is in force.

Other cards offer the 0% interest only on new purchases, so there is no advantage to transferring a balance. Some only offer it on transferred balances, so there is no benefit in planning purchases on the card if you want to finance them at low interest.

Watch Those Fees

If you are receiving 0% credit card offers that allow balance transfers, be aware that some card companies charge a fee for accepting the transferred balances. Usually the fee is a percent of the transferred balance, and it is set at a minimum of $15 and a maximum of $75. These fees can differ with every offer you receive.

Watch Those Penalties

With 0% credit card offers, it is typical that a late payment results in a penalty of the low interest being revoked and replaced with what often can be a very high interest rate, as much as 29 percent. It is not unusual for the penalty to take effect with just one late payment.