How to choose a 0 Apr Credit Card?



You want to transfer your balance to a 0 apr credit card. You want to reduce your finance charges and eventually eliminate your credit card debt. You have a good FICO score which enables you to get a reasonably low apr credit card. Your strategy should be to get a 0 apr credit card, one that offers an introductory 0% apr on balance transfers. You then transfer you balance over to your new 0 apr credit card. You should not make any purchase on the new credit card, but rather, just pay the minimum interest required. In the meantime, use the savings you have made on the interest payments with the new credit card and start to gradually pay off your credit card debt with the higher interest on your existing credit card. Once you have paid off your credit card debt on all your higher interest credit card, only then do you start to pay off the debt on the 0 apr credit card.

However, there are some fine prints and points which you should be aware when you choose a credit card to transfer your balance. This article exmaines how to choose a 0 apr credit card. An ideal credit card for transfering balance will have the following features.

Get a 0% apr for as long a period as possible.

You should try to get a credit card that offers 0% apr for preferably 12 months or billing cycles. Most will offer only for 6 months, but the longer you get a 0% apr, the better. This is because depending on the amount of credit card debt you have, it may take you a couple of years to pay off your credit card debts. You want to have a 0% apr as long as possible.

The apr should be low after the introductory period

Make sure the apr after the introductory period is the low as well (or at least as low as your credit profile will allow). There are many not so low apr credit cards that offer a 0% apr for a period, but once it is over, you are stuck with a high apr. So beware of this.

No balance transfer fee

This is not such a big deal, but still, the typical charge for a balance transfer is 3% of the balance transfer, with a minimum charge of $5.00 and a maximum charge of about $50.00 to $75.00. A credit card that does not charge any balance transfer fee will save you some money.

Avoid credit cards that use the two cycle average daily balance method of calculating balances.

Most credit cards use the average daily balance method of calculating balances (including new purchases). If you carry a balance and have a plan to reduce your balance every month with the aim of getting rid of your credit card debt, the two-cycle average daily balance method will result in you having to pay higher finance charges. See the article on How the 2-cycle average daily balance method affects your finance charges. This point cannot be stressed enough. Please read the terms and conditions carefully on this point.

Get a 0 apr credit card that has the introductory period start from the date of transfer rather than account opening date

This is not such a big deal, but it gives you some flexibility if you need to do a balance transfer later. Most credit cards give you a 0% apr for a certain period starting from the account opening date. Some credit cards however, allow the introductory period to start on the date of transfer and give you a generous window (time period) to do your first balance transfer.

Before we end, here is one more reminder. Make sure you pay your bills on time. If you do not, your 0% apr will no longer be zero perecent. The credit card company will adjust your 0% apr up the moment you are late or skip a payment. Make sure you pay your existing credit card the minimum payment until your balance tranfer is completed.

So let's have a recap. When you are choosing a 0 apr credit card, try to get one which
  • Has 0% apr for 12 months (or as long as possible)
  • Low apr after the introductory period
  • No balance transfer fee
  • Does not use the 2-cycle average daily balance method of calculating monthly balances
  • Has the introductory period starts from the date of balance transfer rather than the date of account opening



This article was written on : 13th December 2004 , but updated on 11th March 2005

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