Credit Card Glossary
Zero Interest Credit cards
Zero Interest cards are temptations that promise no interest for a temporary length of time. They are marketing devices designed to lure you to a different credit card by offering to have your present outstanding balance transferred to their card to be paid off at zero percent interest.
Usually the period of zero interest offered is about six months. However some of the credit cards out there will offer this zero interest for the life of the loan. Of course there is a big catch for this.
Common terms and conditions for these zero interest cards include being required to use the card for purchases every month at certain dollar month. If you fail to meet any of the terms or conditions of the zero percent agreement you may find your interest rate on the transferred balance serving to heights beyond 30%. The zero interest card company can also do nasty things to you like smack on an outrageously high interest rate at their sole whim and discretion if you miss one payment or even if you miss one payment to another credit card company or are late with any of your bills or with your mortgage!
Ideally your zero percent interest rate would stay with your for the entire time it took you to pay off your transferred balance from your previous credit card. However any payments that you make on the card are first applied to reduce the transferred balance. The amounts you charge presently on your new card are subject to whatever the interest rate is for new purchases. Of course this figure might be significantly higher than the zero percent you are carrying for your transferred balance, So as your balance on the card for new purchases increases (carrying with it that higher interest rate) you may find yourself with a great deal of high interest rate debt after having paid off the transferred balance.
A zero interest rate credit card is only worth your while if you are able to meet the minimum present monthly card usage requirements without running up additional charges on the card and if you can pay off your transferee balance relatively quickly without ever once being late on a payment to the card issuer.