Zero Interest Credit Card - When is the Rate Hike?
Don’t think a zero interest credit card makes a credit card company money? Guess what? It actually DOES (usually, at least). That’s because it gets customers to spend and to transfer balances onto that company’s credit cards, with the hopes that they can’t pay it off before the promotional zero interest rate period ends.
Some customers use these zero interest credit cards wisely to consolidate debts at a lower interest rate without adding to the debt. They do this with a zero interest balance transfer offer from the credit card company.
This is great for people who have a lot of credit card debt that they need to pay off. This works only if you pay off your credit card debt in the time allowed for the 0% APR (annual percentage rate). What to look out for, though, is how much is the balance transfer fee?
Another good way to use zero interest credit cards is when you have little debt, but want to make a big purchase. You can use the zero percent credit card offer to finance that purchase for no interest over a period of several months!
But here’s the catch - the credit card companies are able to make a profit by raising their interest rates after the introductory zero interest credit card rate expires. These rates can go up a lot when this low introductory rate goes away. They’re betting that you will have a balance remaining when the promotional period ends. You have to make sure you know all the details of these offers, including what the rate will be after the zero percent credit card promotional period expires.
To learn much more about how a zero interest credit card works, click the above link.