Get a Balance Transfer to Pay Zero Interest on your Debts in 2013
Zero interest credit card offers are becoming more popular again. For several years following the stock market crash of 2008-09, these offers were practically non existent.
In 2009, the Federal Reserve slashed interest rates to near zero. That same year Congress passed the Credit Card Accountability Responsibility and Disclosure Act. Unlike the Fed action, the Act had no price controls, or rate caps or fee setting. Credit card companies went bananas raising APRs to astronomical levels and adding all kinds of fees. Credit card companies can charge you a hefty late payment fee and raise your APR to above usury rates that normally are 25%. Credit lines were slashed and accounts closed, some for no reason.
Now that credit card companies are back on solid footing, they have begun to offer zero interest card offers again. The extent of their comeback can be seen in their stock prices. A purchase of 100 shares of Master Card in 2009 at $124 is now at $484, for a profit of $36,000. Visa rose from $45 in 2009 to a recent price of $145 for a profit of $10,200.
Now you are receiving these wonderful zero interest credit card offers again. What should you be looking for? Here are several key factors to consider:
Analyze your current credit card debt. Even though you have a high credit score above 700 you may be rejected. Card companies look at you debt to income ratio. If you already have high credit card balances outstanding, it may be the reason for not issuing you a card.
Take a zero interest offer only if you can pay off your balance in full or most of it. Otherwise at the end of the period you will be slapped an extremely high APR that can range from 17.99% to 24.99%. Keep in mind that your APR will vary depending on your credit balances at the end of your zero interest.
Look for the longest zero interest in months. Some now go as long as 22 months.
Check for balance transfer fees. Only take a card that has no fees, or fees that can be recouped with your interest savings. A 5% transfer fee on a $10,000 balance transfer amounts to $500.
Examine other perks. Some cards offer 5% cash back on new purchases. These are usually charged the higher APR. Some will give you a bonus of $100 if you buy $500 in the first three months. Be careful of these ticklers. Remember, card companies are masters at making you push the “buy” button. What you are trying to do is to pay off existing debt, not add new debt.