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Why You Should Worry About 0% APR Offers Going Away

Jan. 30, 2015
Credit Cards
0% APR Offers Going Away
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With so many 0% APR credit card offers with long introductory periods available, you may feel no rush to apply for one. But be careful if you are taking your time on signing up for such an offer; upcoming changes to interest rates by the Federal Reserve could mean these generous deals are on the way out.

What are 0% APR offers?

Many credit card companies feature 0% APR introductory offers as a way to entice potential customers. For a limited time, the cardholder will enjoy zero interest on purchases, and sometimes on balance transfers too. In an effort to stay competitive, credit card issuers have made these offers increasingly generous in the past year. While some cards offer 0% APR for only five or six months, many now offer zero interest for as long as 18 months.

If you’re using a zero-interest credit card for purchases, you get to enjoy a long period of time when you can carry a hefty balance without paying any interest on it. If you use it for balance transfers, you get to leave behind a high-interest credit card and make progress on paying off your balance, since no new interest accrues for a set time.

Why these offers may go away

As a result of the recession, the Federal Reserve has kept interest rates very low for several years to help promote lending. Now that the economy is improving, experts predict that later in 2015, the Fed will begin to raise short-term interest rates. This means credit card interest rates will begin to increase, and because of this, 0% introductory offers will become less common, especially during the second half of the year.

Don’t wait until it’s too late

If you have debt on a high-interest credit card and have been contemplating transferring it to a 0% interest credit card, now is the time. If you see a great 0% balance transfer offer, act now, since they are likely to start disappearing soon.

A word of caution

If you do see a 0% balance transfer offer you don’t want to pass up, there’s something you must keep in mind: That doesn’t make it free. True, you will pay no interest on that balance for the duration of the introductory period, but you will still be subject to a balance transfer fee, which may be as much as 3% of the transferred balance. You may also be required to transfer the balance by a certain deadline to be eligible for the 0% APR offer, which is usually 30 to 90 days after opening the card. Read the fine print carefully before applying.

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