Are 0 Interest Credit Cards All They Are Hyped Up To Be?

You are considering making a big or substantial purchase for your home, say a brand new living room set that will be about $3,000. You think that if only you could charge this purchase to a 0 interest credit card it would be so nice. You would be able to buy this living room set and pay it off over time and never have to pay a penny in interest.

Think again. Or rather, read the fine print before you sign on the dotted line. Most people, unless they have an absolutely terrific credit score will not even qualify for 0 interest credit cards. They will be offered a different type of credit card from the company when their application is approved.

Most of the time, they will not even know they have not qualified for the 0 interest credit cards they applied for in the first place. They will receive "a" credit card in the mail, activate it without checking it carefully, charge their purchase and then be extremely unhappy when they realize they are being charged interest. Not only are they being charged interest, they are being charged interest at a very hefty rate to boot!

When applying for any credit cards, the potential buyer must scrutinize the application and the accompanying paperwork very carefully. Most credit card companies that offer 0 interest credit cards have very clearly delineated repayment policies. If you do not understand these policies you can find yourself saddled with significant debt in a fairly short amount of time for a purchase you thought could be paid back without any interest accruing.

If you do qualify for 0 interest credit cards, they can really work to your advantage because you can essentially borrow money for free. You will be able to maintain your balance for a certain amount of time without any interest accruing and that means that you are borrowing the money for free. But be careful to take note of when the 0 interest period ends.

You will want to check carefully to see what the interest rate will be on your 0 interest credit cards once the initial 0 interest period expires. Often, this type of credit card ends up charging very high interest once the initial period is finished. This is how the credit card company recoups the loss they sustained by extending the 0 interest offer in the first place.

People are always interested in 0 interest credit cards when they can get one. What they do not understand is that what they are really looking for is a credit card that charges no interest. Yes, there is a difference.

Sometimes people will apply for 0 interest credit cards thinking they can do a balance transfer from one of their high interest credit cards to the new credit card. This is a slippery slope financial trick that you probably do not want to start on.

The credit bureaus determine your credit score by many different things. They keep track of the number of times an individual applies for credit. If you have made multiple applications for many credit cards, this can go against you in your credit score and actually lower it rather than raise it.