Credit cards and zero interest offers

Americans use credit cards like never before, encouraged by "limits" that are outrageous. It is not unusual for an individual to have a charge card limit that is more than their annual income. Credit cards are useful, but they are often expensive, with rates that can average as high as thirty percent per year for individuals who fail to pay their bills on time. The average American family has nineteen credit and debit cards, and an outstanding debt of nearly five figures from their use.

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For people who have headaches with charge card debt, it can be very hard to pay money back when the interest rates are so steep. Until the major charge card issuers raised their minimum payments recently, a great number of individuals who paid only the required payment each month saw their balances rise after making a payment.

A lot of consumers with these types of problems may find an advertisement in the mail one day from a company offering another charge card with a limited promotional offer. Sometimes, credit card companies offer temporary interest rates that can run as low as 0%. The limited offers from charge card companies vary, but they often promise a low introductory rate for the initial few months if you transfer a balance from an existing account. Zero percent interest seems terrific to many, if not most consumers and they often move swiftly to move their multi-thousand dollar balances to the new card so they can pay 0% interest for a while.

Are these offers legitimate? So, what is the story?

Yes, 0% interest charge card offers are legitmate, to a point. The details of 0% interest advertisements are ordinarily on the back of the statement, and written in what seems like micro-print. Debtors considering a zero interest credit card should check out the fine print on the documentation for the credit card account.

Here are the items may encounter in such an offer:

• The introductory rate will apply just for a specifically stated period of time.
• Yes, they will look at your credit record from time to time to see if you are paying your electric bill promptly. Companies may raise your rate of interest for making a late payment to anyone else, using what is known as the "universal default clause."
• You might forfeit the "low" rate if you make a payment late on the account.
• Monthly payments will be applied to the charges accruing the lowest rate of interest first, so any new purchases not paid back will accumulate interest at the high rate.
• You may lose the short-term rate if you make a late payment on any other account you have!
• The interest rate applies only to the moved balance, and not to new purchases. New expenses will continue to accrue interest at a much higher rate, many times as much as 20%.
• They may raise your interest rate for any reason at all at any time.

If you are not responsible enough to use a balance transfer, be cautious, as it could be a pricey mistake. If you are unusually disciplined, you might be able to make use of a short term, low interest balance transfer. For a lot of people, zero interest credit card balance transfers only offer an opportunity to create yet another high interest debt. By all means, if you can transfer a balance, pay it off in time, and avoid using the account for any other purpose, it might be worth your while.