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U R @: Education Center : 0% APR Credit Card Offers : How to Misuse a 0% APR Balance Transfer Credit Card
HOW TO MISUSE A 0% APR BALANCE TRANSFER CREDIT CARD
Credit card companies want your business. More specifically, they want your money. One way credit card companies lure you in is the 0% APR balance transfer offer. And, while 0% balance transfers are an excellent way to save money, misusing a 0% balance transfer credit card can trap you with higher interest balances.
If you take a look at the terms and conditions of your credit card, you may notice some very small print that reads: all payments will apply to lower interest balances. In other words, if you have a transferred balance of $1000 at a 0% interest rate and $1000 in purchases at a 14% interest rate, your payments will be put toward the balance with the 0% rate, not the 14% you’d obviously prefer to pay off. If you take a cash advance, the picture gets grimmer. Cash advances, which are generally charged interest rates in the mid to high 20%’s, would not be paid off until the entirety of the 0% transferred balance and the 14% purchase balance is paid off. Ouch.
Therefore, the easiest way to misuse a 0% APR balance transfer offer is to use your balance transfer credit card for purchases and cash advances during the 0% period. If you are planning on taking a 0% balance transfer and the credit card you are approved for does not offer 0% on purchases, be careful to minimize, if not eliminate your use of that credit card for purchases.
Ideally, one should apply for and carry a credit card that offers a 0% interest rate on purchases and balance transfers. However, if you only receive a 0% APR balance transfer credit card, put your card away until the 0% balance transfer period ends and use a different credit card for new purchases. That way, you’ll truly pay no interest on your transferred balance for the full term of the 0% balance transfer offer.
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