Traditionally, your APR might increase if you made a late payment or if your account exceeded the credit limit. You may have assumed that if your interest rate increased, you had done something wrong.
You may have been shocked to learn that a late payment on one credit account could cause the interest rate on all your credit cards to double or even triple.
Acquiring a new credit card that allows you to transfer your balance from another credit account or multiple accounts makes sense if you have a special offer card.
If you have three credit cards with high interest rates you may find you are paying far more in interest charges each month than you are paying to reduce your credit card debt. This is especially true if you are one of the many consumers who have found their interest rates doubled recently for no apparent reason.
How Much Could You Save in Interest Charges?
The numbers are shocking. If you have $5000 in credit card debt on an account charging 24% interest (which is not unusual today), it would take you more than 23 years to pay off that debt paying minimum payments each month. In the end, you would have paid over $9,000 in interest for the $5000 of charges you made.
Twelve months of 0% interest allow you to pay as much as possible on your debt each month. When every dollar paid is applied directly to your debt rather than to interest charges, the balance will fall quickly.
Best 0 Apr Balance Transfer Cards
One of the best current offers is the Citi Platinum Select MasterCard which offers up to 18 months of 0% interest for transferred balances. The balance transfer fee is 3%. Another option is the Citi Diamond Preferred card which offers terms identical to the Platinum Select credit card.
The interest rate for this account varies and is prime rate plus an addition 6.74%, 12.74% or 16.74% and the APR for your account will depend on you credit rating. There is a default APR of 29.99% for those who are late in paying their accounts or fail to adhere to other terms of the credit agreement.
Discover offers several choices of 0% initial rate credit cards with six months of free interest and variable APR based on credit history.
How to Evaluate The Terms
You may plan to pay off your credit debt during the months when your new account offers 0% interest rate. That is the best path to take but you should also carefully look at the interest rate, fees and terms of the 0% offers in case you are unable to pay your debt quickly.
Choose from one of the major credit lenders. Smaller companies may change terms in the midst of the free period or may not keep the promises made when you opened the account.
Remember that continuing the 0% interest rate for the terms promised depends on making payments on time each month. If you carefully adhere to the terms of the special offer you can save a significant amount of interest with a 0% balance transfer credit card.