Low & Zero APR Credit Cards

Can You Really Save with Low APR Credit Cards

Whenever you consider a new credit card, the interest rate should be a key factor, along with other conditions such as annual fees and the fees charged paying late, going over the credit limit, etc.

This is especially important if you carry a balance since the difference in interest rates can cost you dearly over the life of the debt.

Leading credit card lenders are now trying to hook in new customers (and obviously those with excellent credit) with zero or low interest (APR - Annual Percentage Rate) rate offers.

These cards lead their customers to believe that they are saving gobs of money. They are also often tied in with bonuses such as air miles, rebates or cash back deals.

Be Careful

But all is not as rosy as it sometimes appears. You must read the offering brochure and any paperwork you get with the card very carefully or you might regret your decision to get such a card.

First of all, how long is the low or zero APR good for? Is it only valid for balance transfers or does it apply to new charges or cash advances as well? How high does the rate go after the introductory period?

Is there a fee for the balance transfer? Do you have to pay 3 to 5% of the transfer or cash advance? Is their an upper limit to the fee?

Are you required to make periodic purchases to keep the low rate in effect? Some cards require monthly purchases.

If you do make new charges or cash advances, whether required or not, how are your payments applied? Most banks will apply them to the lowest rate first, allowing later charges to carry their normal – which is to say high – interest rate.

So if you transfer a $10,000 balance under a zero APR offer, your payments will go to the initial transfer. If you then charge $500 for an airline ticket, that will run up rates at 10% or more until the $10,000 is paid off.

What happens if you miss or are late with a payment? Does your rate jump from zero to 29.99%? Will the bank do this to you if you’re late with your electric bill, go over the limit on another credit card, get a drunk driving conviction, lose your job, etc. In other words, you don’t want a universal default clause.

It pays to know these things before you jump at these enticing offers. Once the hook is set it’s too late.

Protect Yourself

How can you protect yourself? One way is by research. Read each offer very carefully. If anything raises your suspicions take a pass. There will always be a better offer around the corner if you have good credit.

If you don’t understand something, call the bank and ask. The information you receive may or may not be accurate. It’s much better when it’s spelled out in writing.

Finally you can deal with lenders who have a record of treating their customers fairly. One such bank is Pulaski Bank. Consumer Reports magazine, in the November 2005 issue, includes Pulaski Bank in their list of The Top 10 Consumer-Friendly Credit Cards. This means it has among the lowest APR's, no universal default clause, no two-cycle billing or balance transfer fees. There is no annual fee, at least a 25 day grace period and, a plus for travelers, no foreign exchange fees.

Low and zero APR credit cards can in fact save you money if you follow the rules without fail. Just be sure of what you are doing and make sure you can meet all the conditions to keep the good deal in place.

Caveat emptor – Let the buyer beware!

For more low intro rate credit card offers, visit Top Low Intro Rate Cards.

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