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0% Interest Card Fees: Know What to Look For

Dec. 31, 2014
Credit Cards
0% Interest Card Fees: Know What to Look For
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Whether you’re about to make a big purchase or just made one over the holidays, a 0% interest credit card can be extremely useful. This type of card lets you carry a balance on your account without forcing you to pay interest on the borrowed money for a predetermined length of time. After the 0% introductory period is over, the normal APR will kick in. Before committing to a 0% interest card, here’s a quick look at two fees you might run up against.

Annual fee

Like some regular credit cards, certain 0% interest cards charge annual fees. Depending on the card, these can range anywhere from $20 to $500. The best 0% interest cards don’t have annual fees, but to qualify for them you’ll have to have a strong credit score. Before applying for a no-interest card, make sure that its annual fee won’t end up costing you more than simply using a normal credit card.

Balance transfer fee

If you’re planning on transferring your current card’s balance onto a 0% interest card, be aware of balance transfer fees. These fees typically range from 2% to 5% of the total amount being transferred. If your credit score is especially high, you could qualify for a 0% interest card that doesn’t have a balance transfer fee. Again, make sure that transferring your balance is worth paying this fee.

Other things to keep in mind

It can be easy to forget that a 0% interest card’s normal APR will kick in as soon the introductory period expires. Your credit history will determine your rates, so they may be quite high if you have a bad credit score. That’s why it’s so important to do your best to pay the entire balance on a 0% interest card during its intro period. Keep a close eye on your calendar and adjust your payment schedule as needed to make sure the balance stands at zero by the time the intro period ends.

No-interest credit cards are great tools if used correctly, and the first step is picking the right one. Know whether your priority is getting a card with a long intro period or a low balance transfer fee. Though not as important, some 0% interest cards also offer rewards and can help pay for gas and groceries, so take those factors into consideration as well before making a final decision.

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