Skip to main content

Sound Advice: November 6, 2024

Stay clear of zero interest credit cards 

These cards may appear to provide real savings, but it's essential to be aware of the potential drawbacks:

Key Points to Consider

  • The 0% APR is temporary. Once the introductory period ends (typically 12-21 months), the regular interest rate applies to any remaining balance.
  • There may be balance transfer fees. Many cards charge 3-5% of the transferred amount.
  • You still need to make minimum monthly payments. Failing to do so can result in fees and cancellation of the 0% offer.
  • Your credit score matters. The best 0% APR offers typically require good to excellent credit.
  • There's no retroactive interest. Unlike deferred-interest offers, true 0% APR cards don't charge back-interest if you have a balance when the intro period ends.

Potential Pitfalls

  • Overspending. The 0% offer may tempt you to make large purchases you can't afford to pay off.
  • Neglecting payments. Even though no interest accrues, you must still make minimum payments to keep the 0% rate.
  • Focusing only on the intro offer. Consider the card's long-term value, including rewards and ongoing APR.
  • Impact on Credit Score:  Applying for multiple credit cards, including zero-interest ones, can lead to multiple hard inquiries on your credit report, which might temporarily lower your credit score. Additionally, if you accrue high balances on multiple cards, it could impact your credit utilization ratio and affect your credit score.
  • Possible Problems with Future Credit Applications: If you carry a high balance or accrue debt, it might affect your ability to get credit in the future, especially if you have multiple cards with high balances.
  • Complex Terms and Conditions: The terms of zero-interest offers can be complex and vary widely. It’s important to fully understand the details, including when the promotional period ends, the interest rate after the promotional period, and any other conditions attached to the offer.

There is no such thing as a free lunch.  So even if you are tempted by 0% APR cards, they require discipline and careful planning to maximize their benefits. Always read the terms carefully and have a repayment strategy in place before applying.

N. Russell Wayne

Weston, CT  06883

203-895-8877

www.soundasset.blogspot.com

 

Comments

Post a Comment

Popular posts from this blog

Sound Advice: February 21, 2024

800-000-0000 That’s 800-000-0000 Again, 800-000-0000 That’s the typical closing for the hard sell commercials that are increasingly polluting media airwaves.   These are the commercials for products or services you rarely need or most definitely should avoid. A substantial number are on behalf of groups of attorneys who would have you believe that you and many others may be entitled to cash compensation for having used or being exposed to some evil item or substance some time in the last few decades.   The pitch always includes a comment that there’s no cost to you unless there is a settlement in your favor. Much of this is rubbish, but when the appeal suggests that there’s nothing to lose, why not take a shot.   And, as you would expect, “advisors” are standing by 24/7 to take your call and help get the process in motion.   What kind of advisor would be available at 3 a.m.? One version of this approach pops up every year between October 15 th and Decemb...
Post a Comment
Read more

Sound Advice: September 21, 2022

The Professional Approach To Stock Selection There are various approaches to stock selection, but the two that predominate are fundamental analysis and technical analysis.  Fundamental analysis is a numbers-based method that evaluates key factors such as income and financial health, including the past, present, and future.  Technical analysis emphasizes movements and formations of stock prices. Fundamental analysis is based on factors that over time have proved to have a meaningful impact on stock price movements.  The optimal picture of corporate profitability is steady growth, both in the past and, prospectively, in the coming years.  Steady growth is rewarded by higher valuations of underlying earning power than those accorded companies with erratic progress. When professionals screen (filter) the data of the broad universe of stocks, they look for companies that move ahead every year, regardless of the prevailing economic conditions.  Although high pas...
Post a Comment
Read more

Sound Advice: July 26, 2023

Is Day Trading a Good Idea? Day trading can be both exciting and potentially profitable, but it also comes with significant risks and challenges. Whether it's a good idea depends on several factors, including your financial situation, risk tolerance, time commitment, and knowledge of the markets. Here are some considerations to keep in mind: Risk and volatility: Day trading involves buying and selling securities within a short time frame, often within the same day. This exposes you to the inherent volatility and risks of the market. Prices can fluctuate rapidly, and unexpected events can have a significant impact on stock prices, making it challenging to consistently make profits. Time commitment: Day trading requires a substantial time commitment. It involves closely monitoring market movements, conducting research, and executing trades. It can be stressful and demanding, as you need to be actively engaged in the market during t...
Post a Comment
Read more