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0% Credit
Cards: Relief from Rising Interest Rates
If you haven’t
checked your credit card statement lately, you should. Why?
Because just about every time the Prime Rate increases, the
interest rate you pay on a variable rate credit card rises
accordingly. Over the past two years, the prime rate has
skyrocketed to 8.00%, up 100% from January 2004, when this
benchmark rate was a mere 4.00%. That means many credit cards
that once charged rates around 10% are now charging close to 14%
or more. Fortunately, credit card issuers have continued to offer
0% interest rates on balance transfers and purchases. For many,
these 0% APR offers represent the best way to cut down on mounting
interest charges.
Currently,
American Express® leads the pack in 0% offerings, with the
American Express® Blue credit card offering a 0% APR for up to 15
months. However, it takes excellent credit to attain this great
introductory rate. In addition to the 15 month 0% APR offer, the
American Express® Blue credit card also offers fixed APR balance
transfers. Unlike the variable rates that apply to most balances,
fixed APR balance transfers allow you to fix in your interest rate
until the balance is repaid.
If you’ve been
stung by rising interest rates, but don’t have the excellent
credit needed to obtain an American Express® Blue, there are still
a number of 0% APR options on the market. Just about every credit
card issued by Chase offers a 0% interest rate on purchases and
balance transfers for up to 1 year. Similarly, most Citi® credit
cards offer at least a 0% for 12 months on balance transfers, with
some cards offering 0% on purchases as well.
So, knowing
what’s on the market, the question becomes: just how much can I
save with a 0% APR credit card? While the precise value will
differ from person to person, the basic answer is quite simple: a
lot. For example, a $5,000 0% balance transfer can save a person
with a 14% interest rate close to $800 over the course of one
year. That’s no small change. If you don’t need a 0% balance
transfer, but want flexibility in paying back your balance, a 0%
APR on purchases will also provide great savings. For example,
using a 0% credit card on just a $1000 of new purchases would
still save you over $100 in interest expenses over the course of a
year.
Smart credit
card usage can save you hundreds, if not thousands of dollars a
year in interest. With current credit card rates moving higher
and higher, a 0% credit card is more of an asset today than it was
just a few years ago. Remember, however, that not all 0% offers
are the same. Be sure to read the fine print. And enjoy the
money you will save.
Click here to view additional 0% APR
credit card applications
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