If you have a good credit history, you are probably besieged by credit card offers coming into your mailbox boasting low, or even no interest credit rates. But are these offers right for you? Can you truly save money on the offers?
The answer to these questions depend on two things, the credit card offer’s fine print and how discipline you are with money.
Be read the fine print very carefully and watch for the following:
- Does the offer say “zero percent financing” or as low as zero percent? If it is the later, understand that only a very few people will qualify for the lowest rate. If you have a few dings on your credit report, your actual rate may be higher.
- Does the offer zero percent offer apply to all purchases or just balance transfers? If your rate for more purchases is higher, make sure you know what that rate is.
- Is there a charge to transfer charges? Even though the new credit card offers zero percent financing, they may charge a fee to transfer the charges from your old card.
- How long will the introductorily rate be in effect? The low rate will probably go up after several months. Find out when, so you can plan to have most, if not all of your transferred balance paid off before then.
- What will the rate be after the teaser rate expires? If the rate is higher than your old credit card, especially if you don’t anticipate paying off your balance during the low rate.
- Are there circumstances that can exempt you from the low rate? Some clauses in the terms and conditions section of the credit card offer may say that the teaser rate is contingent on paying your credit card bill on time. Failure to do so will result in a much higher interest rate. Further, some offers may even stipulate that you have to be current on all of your bills. Fall behind on your utility bill, and you could see your credit card rate go up.
- Another strategy some credit card providers employ is specifying not only a date the payment needs to be received, but also a time, usually in the morning, before mail is received. For example, they may require payment be received on the 8th of the month at 8:00 a.m. If your payment arrives in the mail that day at 1:00 p.m., it is “late.”
While the specific terms and conditions vary depending on your credit card provider, the message is clear: Many of these companies hope to entice you with low or no interest rates introductory, they are hoping that you won’t pay off your balance before the teaser rate expires or that you will violate one of the terms and conditions to void the rate.
However, if you are discipline with your payments and closely adhere to all of the stipulations, you can take advantage of the “too good to be true” credit card offers to pay down your debt without getting hit with high interest rates.
David Plowman