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U R @: Education Center : 0% APR Credit Card Offers : 0% APR Credit Card Offers Save You Money
0% APR CREDIT CARD OFFERS SAVE YOU MONEY
With the exception of the recent 1/2 point reduction, the Federal Reserve has raised interest rates substantially over the past two years. Consequently, credit card annual percentage rates have followed suit. Nearly all credit cards tie their interest rates to the prime rate, which has doubled to 8% from 4% during the string of rate hikes that began in 2004. This has led to interest rates on credit cards rising by 30% or more. Even with the recent rate reduction, credit card interest rates remain relatively high.
For those who carry balances on their credit cards, high interest rates have resulted in higher monthly bills, with many seeing their minimum payment increase substantially. Fortunately, now, more than in recent years, 0% APR credit cards offer a safe harbor from high rates. There are two basic types of 0% APR credit cards: those that offer a 0% rate on balance transfers, and those that offer a 0% on purchases. The best credit cards offer a 0% APR on purchases and balance transfers. How much savings can these credit cards provide? Let’s take a look at the math.
Let’s assume you’re carrying a balance of $10,000. If you simply pay the minimum each month, you will accrue close to $2000 in interest over the course of a year, thanks to daily compounding balances (too bad savings accounts don’t pay that type of interest). With a 0% APR balance transfer, you can expect to save all of that money, plus, you’ll be given time to pay down that debt. When the 0% period expires, not only is there a chance your interest rate will be lower, but, if rates do not go down, you can always transfer the balance to another 0% credit card. Plus, if you make a minimum payment of $150 a month, your balance at the end of the year will be closer to $8200, rather than $12,000. That’s quite a difference.
Now, if you’re fortunate enough to have no credit card debt, a 0% interest rate can be handy tool to avoid interest expenses on new purchases and free up some cash in the short term. Need a new fridge? Have to fix your car? Want granite counters for the kitchen? With a 0% credit card, you can defer the cost of these expenses for a year while taking advantage of high interest rates. How? By placing the cash that would have left your bank account into a high-yield savings account and taking advantage of rewards credit cards.
Let’s assume you will make $10,000 of purchases over the next few months. Using a credit card with a 0% interest rate and 1% cashback rewards, coupled with a high-yield savings account with a 4% interest rate can put about $500 extra in your pocket over the course of the year.
Of course, not everyone pays their balance in full each month. With average credit card interest rates in the 12% to 15% range, carrying a monthly balance of only $1000 can cost close to $150 a year. Saving $150 in interest charges may not be a fortune, but its surely enough to buy a nice dinner with a good bottle of wine.
No matter how you use your credit card, a 0% interest credit card can have a positive effect on both short and long term cash flows. Given that the alternative is paying more than 12% in interest, choosing a 0% credit card in this atmosphere of high interest rates is a no-brainer.
For more information on 0% credit cards, visit the 0% APR credit card section of SmartCreditChoices.com.
Top 0% APR Credit Card Offers
DISCOVER® MORE (SM) CARD - EDITOR'S PICK |
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- 0% Intro APR* on Purchases and Balance Transfers for 12 months
- Earn 5% to 20% Cashback Bonus at top retailers through our exclusive online shopping site
- Earn up to 1% Cashback Bonus on all other purchases automatically
- Increase, even double, your rewards when you redeem for gift cards from our 100 Cashback Bonus Partners
- Editor's Note: Offer not available to current Discover® card holders
- Editor's Pick for best overall offer. Click more details below the card to find out why.
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Intro APR
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Intro APR Period
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Regular APR
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Annual Fee
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Balance Transfer
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Credit Needed
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0% *
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12 Months *
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10.99% *
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None *
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Yes
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Good
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BLUE FROM AMERICAN EXPRESS® |
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- Offers a 0% APR on purchases for up to 12 months.
- Editor's Note: You may be approved and offered a 0% APR for 6 months.
- Low Balance Transfer APR — Get a 2.99% APR for one year
- No Annual Fee
- Earn points that can be redeemed for gift cards, travel, merchandise, and unique entertainment experiences.
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Intro APR
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Intro APR Period
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Regular APR
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Annual Fee
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Balance Transfer
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Credit Needed
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0% *
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up to 12 Months *
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11.49% *
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None *
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Yes
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Excellent
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