On behalf of Kazerouni Law Group, APC posted in Consumer Protection on Wednesday, June 7, 2017.
No-interest credit card offers can certainly prove tempting, but if you do not do your due diligence about prospective offers before signing on to one, you may find yourself in serious financial trouble. No-interest credit cards can be especially alluring if you are, say, looking to transfer an existing credit card balance to avoid paying interest; they also have downfalls, and doing your homework is the best way to avoid getting yourself into trouble.
So, before you sign on the dotted line and secure your no-interest credit card, consider the following:
The fine print
Yes, that no-interest period is great, but it does not last forever. In most cases, it disappears after a year or 18 months, at which point you will have an interest rate that may well trump that of other cards you already have and use. It can be easy to generate considerable debt on your credit card during the no-interest period, and if you do not pay it off in full by the end of the timeframe, you may wind up paying quite a bit of interest on it. Your card may also have an annual fee, so you should take that into account as well.
Balance transfer fees
If you are like many consumers and you eye the no-interest card so you can transfer over an existing balance, know that there are also often fees involved in doing so. In many cases, the amount you must pay for the transfer is equal to a small percentage of the transferred amount, such as 3 or 5 percent. Depending on how much you are trying to transfer and how quickly you can pay it off, making the balance transfer may or may not benefit you in the long run, and it may or may not make it easier for you to eliminate your debt.
If you do decide to move forward with getting a no-interest credit card, you still must qualify for it, as you would any other line of credit. The stronger your credit score, the better types of offers you can expect to receive.