Zero Percent Credit Cards

So if you have decent credit you are probably getting Zero Percent Credit Card offers. I have been using credit cards as part of my financial plan since shortly after I got my first credit card. I have played with them and compared the different offers a lot through the years.

How do Zero Percent Credit Card Offers Work?
First you will get an offer from your credit card company. They will send you checks that have an expiration date somewhere in the next two months. These checks when cashed will add directly to the balance you owe on your charge card account.

You will be charged a service fee of usually up to 3% of the amount you borrow. With some cards there will be a minimum and a maximum charge. The maximum charge is very important. Many of the Maximum charges are $50 or $100. Some cards no longer have a max charge so you will pay the 3% on the whole amount you are borrowing. If you get nine months to pay off the zero percent then this will be .33 percent per month if you do not get any penalty fees or any other charges. That is not zero interest.

You will be charged the service fee as soon as your zero percent offer check hits the bank. This will be added to your balance.

What if you have a balance on the card already?
You will be charged your normal interest rate on the balance until it is paid off. All of your payments will go to pay off the zero percent balance before any payment will be made on your interest bearing balance.

What if you charge more on your card after using the zero percent offer? You will be charged interest on your additional purchases from the day of the transaction. You will not get the 20 to 40 day grace period because you are carrying a balance on your card. Again none of your payments will be applied to the interest bearing part of your balance until your zero percent balance is completely paid off.

This Article was written by Rick Kern