0% APR Credit Cards can be used to lower your debt by transferring your existing balance to a card offering this type of deal. This benefits the card user in one of two ways:
Short term benefit:
If you are looking to reduce your repayments for your credit cards; eliminating the interest charged on your balance is a great way to do this. You will be required to make payments on the outstanding balance only so your debt will continue to be paid off but at a much lower cost to you than if you were paying interest and balance combined, the downside of this is that these offers only last for a fixed period of time, usually from 3 to 18 months and once they end you will be subject to interest, usually at a higher rate than your previous credit card.
Long term benefit:
This method has no immediate impact with regards to saving you money and the phrase ‘long term benefit’ may seem a little misleading to some but this is by far the best way to utilize 0% APR Credit Cards. Instead of lowering your monthly repayment during the 0% interest period, maintain your existing level of repayment or, if possible, increase it a little. By doing this you will remove as large a portion of your balance as possible which means your interest payments will decrease when the offer finishes which obviously wouldn’t be the case if you just took advantage of the lower monthly repayments.
Can I jump to other 0% APR credit cards when my current offer ends?
There is a school of thought that believes you can continue to take advantage of these offers one after another, transferring your balance from a credit card company whose offer is about to end to other 0% APR credit cards; therefore achieving a 0% interest level for the life of your debt.
In theory this may seem so and it may well have been the case at one time but recently, credit card companies have been declining greater numbers of applications, even from those with good credit scores!
The reason for this is that credit companies have realized that they are losing substantial revenue from the continued abuse of this type of offer (although the global credit crunch may also have something to do with this) and they can only stop it using one of three methods.
1. Increase the transfer fees to such a level that the offer does not appear attractive to those with large balances to transfer.
2. Increase the post offer interest rate so that any losses incurred by those customers that jump to other 0% APR credit cards are carried by those that stay, or:
3. Decline applications from those individuals that are seen to be ‘offer chasing’. This information can be easily obtained when your credit is checked.
As the first two options punish loyal customers it is fairly obvious that the third would be the preferred choice of the lender.
This does not rule out the possibility of being able to continue a line of credit at zero interest totally it just means that your credit score may well suffer a little as a result of declined applications.
So to conclude: 0% APR credit cards are an excellent way to reduce your overall debt but be wary of misuse and always check post offer interest rates, transfer fees and any penalties that may eliminate any potential savings created by the offer.
To find out more about how you can reduce or eliminate your credit card debt quickly, or if you want to read more articles on credit cards and debt visit http://www.creditcardconsolidationloanssite.com or http://www.consolidatecreditdebtnow.com
Article Source: UnArchived Articles
|
