Reduce Credit Card Debt Utilizing 0% APR Credit Cards
If you are one of many losing a battle to debt, you may be looking for ways to get out from under the pile of bills. While the last thing you think you want to do is put anything on a credit card, a new card may be your best choice to getting control of your other credit card debt.
Look at what you are paying per month right now trying to pay off your current bills. How much of that is interest? If you’re not sure, look at your statement. You will find the interest percentage rate somewhere in the paperwork.
If you have credit cards with high interest rates the majority of your monthly payments may be going to pay just the interest, and the principal is still sitting there, adding more interest month by month.
Your answer to getting rid of that credit card debt may be in getting 0% APR credit cards. These are cards that offer a great introductory offer of allowing you to transfer your other balances, and have no interest added to the amount you owe for 6,9 or even 12 months. That is a lot of time to let your monthly payments chip away at the credit card debt you have built up.
Still, you should proceed into the world of 0% APR credit cards carefully. Here are some questions you should ask before jumping in:
How Long Does It Last?
Know the duration of the 0% APR credit card offer. If you are transferring over a lot of debt, you want the offer to last as long as possible, to give you more time to pay down the balance.
What Will the Interest Rate Be?
Eventually that introductory offer is going to run out. At that time you need to know what it’s going to cost you in interest every month. The downside of many 0% APR credit cards is that they offer the low initial percentage rate then hike it substantially when the special rate ends.
What are Your Transfer Fees?
In order to transfer your high interest balance to a 0% APR credit card, you are likely going to have to pay a transfer fee. Some companies waive this fee, others charge a percentage of the amount you are going to transfer (usually 3%). Depending on how much credit card debt you transfer, the fees may be unmanageable.
Once you have those questions answered you need to remember a few rules with your new 0% APR credit cards.
- Don’t miss a payment. They can not only charge a late fee but also take away the 0% interest rate and move you to their regular rate on your balance.
- Don’t charge anything else. When you charge other items on the new card, they are going to be accruing interest. But as you put payments on the card, they are going to be put towards the interest free balance first. Until the card is close to paid off you may want to avoid adding any new charges.
- Don’t slack off on payments. Just because you have 0% interest credit cards doesn’t meant you should pay less per month. The idea is to get rid of your credit card debt. Pay just as much as you did before, if not more, so you can pay down the balance before the interest rates kick in again down the road.