How To Know If A Zero Percent APR Credit Card Is The Right Move For You

You see them floating around everywhere, and they sure do look tempting. We’re talking about those shiny new zero percent apr credit card offers, all of which make that big and egregious promise: “transfer your balance and get a Zero percent APR!”

It sounds like an amazing deal, right? Well…yes, and no! As with any offer that seems too good to refuse, you’ve got to read the fine print. 

Just because it’s a crazy low annual percentage rate doesn’t mean that it’s not still a credit card. And it carries with it ALL the potential issues that another line of “buy now, pay later” always does.

So is it a good idea to just say “no thanks” to all these zero percent APR credit card offers when they hit your inbox? 

Again, yes and no! What you really need is to know what you’re getting into. Get a real picture of the pros and cons of these Zero percent APR credit cards FIRST, and make an informed decision. Because ALL of these offers don’t quite tell the whole story with the big, bold headlines…

Here are six huge things to take into consideration BEFORE you say yes (or NO) to a tempting Zero percent APR (or low percent APR) credit card offer.

1. Do you have the discipline to NOT use this card after you transfer your balances? That is, do you trust yourself to transfer your funds, then forget you have a new line of credit to play with? If that’s a yes, consider whether to backdate the purchases. This way you have to pay off the balance first before you can make new purchases. (This is how to avoid all that interest!)

2. What is the promo fee? Is there a fee, and is it on the balance you transfer, or is the ongoing credit card fee for future purchases?

3. What is the interest rate after this “zero percent” thing is over? Be sure to read the fine print. Sometimes the “real” interest rate after the promo fee expires can be crazy high (23% or more on a lot of these cards). Be sure you know what’ll happen when the “honeymoon” phase is over.

4. Do you have a payoff plan for these transferred balances? Consider your plan to actually pay off the card once you’ve transferred your balances. Would it benefit you to wait to transfer your balances until you have a payoff plan? (Because after all, no matter what your interest rate may be, you still have to pay off the balance at some point. Best to create a plan to do so before you make any big moves. 

5. How many hard inquiries have you had in the last year? Any time you request a line of credit, you get what’s called a “hard inquiry” from the lender. (In this case the credit card company). It’s important to limit your hard inquiries to six inquiries every two years. If you have more than that, it’s going to send red flags to credit card companies. That hurts your credit score and your chances of getting approved. (Nothing worse than your credit score taking a hit AND being denied credit, right?)

6. Read the extra fine print. Make sure you understand ALL the fees and terms. For example, I recently saw an offer that carried an extra 5% fee for additional balance transfers. Would it be worth it to transfer your smaller balances along with the bigger ones, or just pay them off first? The “privilege” of transferring your balance might be canceled out by the fine print fee. If you have smaller balances, it might save you more money in the long run to just pay them off. 

So the takeaway here is to know what you’re getting into first! Read the fine print, make a note of the numbers, and see if the benefits really are what they say. Then, if you DO say yes, know WHY you’re doing it. 

Make sure that you’ve got a plan on how you’re going to handle having a new card. Know what will you use it for, and most importantly, how you intend to pay it off. Have a plan to pay off these transferred balances in a timely fashion AND manage a new line of credit wisely. 

It’s your money, and it’s your credit score on the line. Make sure you’re well informed before you jump into any contract! 

Until next time,

Love, light, and MONEY, Honey…

Kaylee

P.S. Are you looking to improve your credit score but don’t know where to start? Click here and find out how I was able to increase my credit score by 100 points in 3 months (and how you can do it, too)!