A credit card allows you to fully cover the cost of an item of purchase while allowing you the time to pay it back. Credit cards do charge an interest on pending payments ultimately making the cost of the item more that it’s original price.
What Is 0 Purchases Credit Card
The downturn in the economy has led to credit card companies enticing people to make purchase through a 0 purchases credit card. Such cards allow a person to avoid any interest charges for a set period on any purchases made.
If the person does manage to pay off the cost of the purchase within this set period, it will be like having paid for the item in installments without having to pay any extra charges. Failure to pay the full amount before the expiry of the period will then lead to interest charges being charged.
Period With No Interest
12 trough 16 months no interest period now possibleCompanies have now started allowing periods of up to a year when no interest is charged, with some companies even allowing a period of 16 months. If a person is in the habit of paying credit card dues promptly every month, then a 0 purchases credit card makes no sense. What it would mean is that you are already not paying any interest.
But credit card companies get a major portion of their income from interest that they charge on overdue balances, and these interest rates can be quite steep.
A vast majority of people do keep their credit cards active by ensuring that they pay the minimum due amounts and keep the other pending amounts as balance.
This does cause the interest payments to mount significantly every month. Some cards even charge you a penalty over and above the interest.
Finding The Best 0 Purchases Credit Card
Finding the best 0 purchases credit card requires that you consider all the various offers that are being made by financial institutions and banks. Application to most of the companies that do offer a 0 purchases credit card can be done online and it is best to compare the various cards , their conditions, their interest rate on delayed payments, the period on offer for 0% interest and other conditions.
CONDITIONS TO WATCH
- Their interest rate for delayed payment
- The 0% interest period
- All other conditions
Make sure you read through all the conditions that are listed, so that none of them come as a surprise at a later time. Look at administrative charges that can mean that the entire transaction is not free of some cost. It is very easy for people with good credit scores to get such cards.
0 purchases credit card is being used by many credit card companies to invite first time users into getting used to the advantage of having a credit card. It is best to wait for a response when you make the application for a 0 purchase credit card. Making too many applications can result in downgrading of your credit score and this can cause repercussions.
High Interest Credit Card Charges
A 0 purchases credit card is best if you are able to make sure that you never allow the interest free period to lapse, and ensure that at the end of this period, the balance is fully paid up. This way you will avoid paying the fairly high interest charges that such companies do levy on unpaid balances.
These charges can be as high as 20 to 25 % and can literally bankrupt you if you are not careful with budgeting the payments on your credit card. Also make sure you are aware of the credit card limit that is imposed by the company. This will vary depending on the company, your credit rating and other factors.
THINGS TO CHECK
- Charges as high as 20 to 25 %
- Credit Card limit imposed
Another form of getting help to manage your finances can come from a 0 finance credit card. Such 0%APR credit cards will charge no interest for a specified period and you can transfer the balance on other credit cards to this card, which will enable you to pay off all dues.
You are then having some time in which you can arrange to pay back the due amounts without any fear of additional interest charges.
THINGS YOU CAN DO
- Look for 0%APR credit card
- Transfer balance of others credit cards
- Pay off all dues
Switching such balances is something that cannot be done too often, as this could not only reduce your credit score but also cause credit card companies to view you with suspicion. Most such 0 finance credit cards are only introductory in nature, and the full APR, which is the annual percentage rate, becomes applicable once the period offered for 0 finance is over.
0 purchase credit cards are very useful if you need to make a large amount of purchases and do not have the ready cash for it. Such situations are quite common during Christmas and the New Year; special occasions like birthdays or anniversaries or can even be as a result of an annual vacation.
Be very sure of the period allowed for 0% interest and the APR that will be charged after this. Make sure that you make regular payments into your credit card account and ensure that the balance becomes nil, before the APR starts being applicable.
Unless you are sure of maintaining strict control on the repayments a 0 purchase credit card can otherwise lead you into a debt trap of your own making.
A 0 purchase credit card or 0 finance credit card is only available to you if you can get the trust of the company offering such a card. So if you have a credit history that does not make for good reading, you may as well forget about getting such cards and look for other alternatives to manage your finances.
Even then, a few companies may overlook poor credit ratings, but it is almost certain that they would be charging interest rates over the standard ones, and are likely to be much less forgiving of overdue balances. Average interest rates for credit cards are about fourteen percent, but when your credit score takes a dive, this rate could be very close to thirty percent.
While such cards can be very useful for senior citizens they still need to make sure that they have the capacity to repay the amounts due, whether from annuities or other sources of income. So make sure that you have that amount coming in to you in the future so that your credit card balance is brought to nil.