Banks keep devising new methods to attract customers all the time. Issuing zero percent interest rate credit cards is one of the ploys they use to obtain new customers. This has proven to be the best way to win clients.
It is without doubt that these credit cards may look very appealing. Many people are using these credit cards as an affordable way to pay off all, or some of their debt. However, you need to be aware that there are certain instances when taking such a credit card could prove useless. Instead of saving money, you might end up spending more. In order to avoid this situation, you need to take a few steps or follow a few basic rules when deciding which credit card to choose.
If the bankcard that you currently own does not impose a yearly fee, and the new card does, then you need to check whether you will still be saving money after paying the annual fee. The annual charges can sometimes be as high as $100. You need to determine whether paying interest is better than paying the annual fee.
Exchange or transfer fees are other charges that can eat into your savings. You need to find out exactly how much the transfer fee is going to be, and how much you will save if you go ahead with the transfer. If you do not pay interest for the six months, then you need to find out how much that adds up to in total. It is better to find a credit card that offers a one-year or over, introductory period. Citibank for example offers a credit card which gives 22 months as an introductory period. This provides you with valuable time to save the money you owe the bank, without incurring any interest.
You also need to consider the interest rate you will have to pay when the introductory period expires. A lot of credit card companies will compensate for the attractive promotional offer, by charging a much costlier rate of interest after the discount period ends.
Many customers do not realize that interest will be applied on the purchases that you make using a balance transfer credit card, even during the introductory period. The zero percent interest rate is only for the outstanding balance that was transferred to the new account. It is not for the extra purchases that you make using your credit card. Normal interest rates will be applied for all these purchases.
Remember, getting a balance transfer card does not mean that you can bid goodbye to all your worries. There is a lot to take into consideration when you make a balance transfer. The most important thing, is to figure out how to come up with the money to repay your outstanding loan. This will require a strong commitment to changes in your lifestyle and day-to-day activities.