5 Cons of Owning a 0 APR Credit Card
Below is a MRR and PLR article in category Finance -> subcategory Credit.
5 Drawbacks of Owning a 0% APR Credit Card
If you recently received an offer for a 0% APR credit card, you might be tempted to sign up immediately. The allure of zero percent interest could seem like the perfect opportunity to shop freely for six months. It might even appear to be an ideal solution for consolidating your credit card or bank loan debt. However, before you start spending with your new card, it's important to be aware of some significant drawbacks.
1. Limited Introductory Period
Credit card companies typically offer 0% APR for only a short time, such as six to twelve months. Once this introductory period ends, you'll no longer benefit from the zero interest rate.
2. High Interest Rates After Intro
After the introductory offer expires, the interest rate often spikes, sometimes reaching as high as 19% to 21%. Rates on cash advances and other transactions are often even higher.
3. Penalties for Late Payments
Paying late during the introductory period can trigger a penalty interest rate on your entire balance, which could soar to 20% to 24%.
4. Limited 0% APR Application
Although some cards apply the 0% interest rate to all purchases and balance transfers during the introductory phase, others limit this benefit to balance transfers only. Purchases might incur high interest rates from the start, so always read the fine print.
5. Confusing Conversion Period
As your card transitions from the 0% APR to the regular rate, you might be charged interest on any remaining balances from the introductory period purchases.
While a 0% APR credit card can initially seem advantageous, it's crucial to fully understand the potential consequences and costs involved. Make informed decisions to ensure the benefits truly outweigh the drawbacks.
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