Zero Interest Rate Credit Cards: A Myth!
Obtaining your first credit card is an exciting achievement and an opportunity to start building your own credit. Unfortunately, it can be difficult to make large purchases (such as buying your own home) with a poor credit score. Whether or not we are able to purchase our first vehicle or home stems from our ability to manage finances responsibly. If you’ve found a zero interest rate credit card or you’ve received one in the mail it’s best to look into the terms that apply so that you do not get caught up in financial problems with credit companies later on.
If you do qualify for a credit card that has a zero percent interest rate you’ll still have to watch how you spend the money that is being loaned to you. If a payment is missed and your credit score begins to fall, more money may be owed because of the high interest rates. It’s recommended that you look into the terms that apply to make sure that you do not run into any debt in the future.
It’s often that people use credit cards when they spend more money than they can afford. Carrying a high balance around without paying it off immediately can cause you to pay more in interest, even if it does not apply to your monthly balance. It may pan out over time depending on your credit limit and how long a balance remains on the account.
Sometimes if there is a ‘zero percent interest rate’ there are more risks involved. If you are considering using a new credit card company it’s best to look into the APR or annual percentage rate to see whether or not it is higher than most credit cards. Keep in mind that if you continue to apply for these types of cards and continuously get denied it will have a negative impact on your credit every time someone pulls your report.
In some cases a zero interest rate is a good thing if you are making a couple of large purchases as long as you can pay it off in the amount of time that it remains interest free. The sooner that you clear a balance on your card the better it is for your credit score. Is this something to take advantage of or a dangerous gamble?
It’s highly recommended that you avoid spending too much money on any loan or card. Keep in mind that it is still money being loaned to you by a company. The company is in control of the loan terms which means that interest rates can change at any given time. Purchases add up quickly on low interest or zero interest rate credit cards and it can take months to pay off. Be wise before applying for any loan and ensure that you are in good financial standing to pay off the balance by the assigned date.