About Zero Percent Credit Cards

Most likely you've seen some great offers, especially recently, for zero percent credit cards. Some credit cards won't charge you any interest on the purchases you make with the card. Other cards offer you a 0% payment on the balances you transfer to them. But the question is - is a zero percent credit card really a good deal?

To put it simply - it can be a good deal, if you follow all the rules. Like all business out there, the card-issuing companies also need to make money. They make their money by attaching hidden strings to these great deals. So as you look at zero percent cards, you'll need to watch out for these things:

- Limited-time offers: Most zero percent cards offer 0% interest only for the first few months. After the predetermined time has passed, the rate will skyrocket, and probably right when you've just started to get a somewhat large balance on your card. Offering zero percent does cost the issuing company a bit, but that's nothing in comparison to how much they'll make after the interest rate rises and you have to pay plenty of extra money in interest.

- Required transactions: You might be required to make a minimum number of purchases each month just to qualify for the 0% rate. That means two things: if you don't make the minimum number of purchases, your rate will go up. And, by making more purchases, you'll probably have a higher balance once the 0% rate expires.

- Penalty rates: Often if you make even a single late payment, charge beyond your credit limit, or bounce a payment check, your interest rate might skyrocket to 20% or more.

- Higher-rate balances don't pay off as fast: Most cards apply payments to the lowest-rate part of your balance first. So, if you transferred your balance at 0%, but your purchases were made at a higher rate, your payments will first be applied to the 0% part of the balance as the higher-rate balance continues to build.

Hopefully this information about zero percent credit cards has helped you with your financial plans.

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