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Zero-Percent APR Credit Card (Forbrukslån) Guide

You have probably heard about credit cards that are offering you zero-percent APR. You can get a preapproved offer in the mail or see the commercial about balance transfer credit cards that will help you quickly consolidate and repay significant debt.

In both cases, it is vital to remember everything you should expect from a zero-percent APR credit card. Generally, it is an asset and tool you can use, but you cannot magically make it appear.

Suppose you wish to sign up for this credit card. In that case, you should understand most of it beforehand. The main idea is to avoid the common pitfalls and take advantage of its benefits.

Monthly Minimum Payment

It would be best to remember that most zero-percent APR credit require making a minimum payment each month. We are not talking about the interest for balances you qualify for but a separate fee to keep it running.

We can differentiate it as both advantage and disadvantage. Since you are eligible for this credit card type, you should understand that you must make a payment on the card. Still, you will not accrue the interest, meaning each payment you make goes to the balance or principal.

Since you will not get an interest due, making payments will help you pay off debt faster than you would. It is as simple as that.

Intro APR Can Apply to Purchases and Balance Transfers

Another ordinary negligence and misconception about zero-percent APR cards is the idea that you can skip interest no matter how you use it. However, things work differently; you will notice it when comparing other options.

Some cards will offer you zero-percent APR on balance transfers, but the same thing will not apply for purchases you decide you make. On the other hand, some card options offer zero-percent APR on balance transfers and acquisitions, which depends on an issuer and your financial capabilities.

It means when you start purchasing on a balance transfer card that applies no interest on transferred balances and not purchases, you will notice accruing interest after each purchase. It happens since each card will charge you different rates in specific situations. Most of them do not come with grace periods for buying, which is an essential consideration.

The main goal is to read the credit card’s fine print and determine how they will charge your interest. For instance, some options may include an introductory rate for the next twenty months from a first transfer. At the same time, you must complete the transfer in the first few months after opening an account.

Everything depends on your credit score. After the introductory period, the standard APR will apply to unpaid balances and additional transfers. The standard APR for purchases can go between fifteen and twenty-five percent, which is vital factor to remember.

You Can Cancel It

Another essential factor you should remember is the ability to cancel the introductory period. For instance, when you qualify for zero-percent APR on your credit card but have a late monthly payment, you will be ineligible for the initial rate from the start.

It means you will go from variable rates that may change and affect your balance overnight. That is why you should pay the credit card bill each time you decide. Another crucial factor is repayment history because it will affect your FICO score and help you get better terms and rates in the future.

Consider Balance Transfer Fees

Before transferring a particular amount to your credit card that offers zero-percent APR for a specific period, you should be aware of the balance transfer fees you must handle.

The fees will go between three and five percent of the overall amount you are transferring. On the other hand, you can get a fixed-rate between three hundred and five hundred dollars for every ten thousand dollars you transfer.

You must ensure that paying a balance transfer fee comes with a financial sense because of the savings you will achieve afterward. That is why you should factor these fees into a debt payoff plan.

Introductory Rate Will Not Last Forever

It would be best if you remembered that credit cards that offer zero percent on APR come with numerous benefits in the short term. Some of them will provide you with longer introductory rates than others. Still, the typical timeline is between one and two years or twelve and twenty-four months.

Since you will not get zero-percent APR forever, you should create a relevant strategy that will provide you peace of mind. The best bet is to pay down your debts before reaching the due when the interest affects the balance.

As soon as the introductory rate period ends, your balance will start accruing interest, which will increase your debt.

They Can Feature Rewards

It is vital to remember that some credit cards with introductory APR will allow you to take advantage of cashback rewards for each dollar you decide to spend. Of course, the rewards can be enticing. It would help if you thought hard and long about potential rewards and how they will affect your repayment strategy.

The main goal you got the balance transfer credit card is to consolidate and repay high-interest debt. That is why you should avoid using the ones that urge you to spend due to potential rewards. Instead, it would be best to avoid spending and make purchases during the initial period.

Suppose you wish to get a zero-percent APR on purchases for a specific time. In that case, you can earn rewards by spending, but we still recommend you avoid it and wait to clear the debt before getting a real rewards card that will provide you peace of mind.

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Reasons for Getting a Balance Transfer Credit Card

1.   Prevent Significant Interest Rate

In most cases, financial institutions and credit unions will offer you a low-interest for balance transfers. Still, if you have a significant balance on a card with a high rate, the best thing you can do is to take advantage of the balance transfer. It is a perfect way to repay your debt timely while lowering the overall amount that will accrue the interest.

We recommend you be aggressive while paying and try to handle as much of the balance each month throughout the process. Still, it would be best if you remembered that taking advantage of the balance transfer rate requires reading the fine print to determine when the intro period expires.

It is vital to ask questions that will help you throughout the process. That way, you can check out the rate, best deal, length of special promotions, and terms. If the card has a low-interest rate and significant fees, it may not be a great offer for you. Having an excellent credit score will help you achieve the lowest rates possible.

2.   Consolidate Debt

It is simple to reach an overwhelming phase, especially if you overspent and maximized multiple credit cards. Instead of stressing yourself, you should streamline balances on a single card, which will simplify your finances. That way, you must pay significant amounts each month without a chance of repaying everything.

The main idea is that you can enjoy a low-interest rate, but you will get a single monthly payment that will help you focus on repaying everything quickly. You should note that when you consolidate balances from a few cards, you must ensure that a new one has a high credit limit to handle all transfers.

3.   Prevent Further Issues

Apart from a higher interest rate, your current card comes with more significant monthly fees, a short grace period, and other terms that will affect your situation. Therefore, you should take the time to find the best one that will fit your needs along the way.

Since your main goal is to get out of debt as soon as possible, you should check out the one that will offer you additional savings. At the same time, you should be aware of when your goal is to handle everything faster because these cards can put you at risk of getting into a more considerable debt than before.

That is why you should avoid charging up the balance and using it for purchasing because it is useless and will drive you away from your main goal. The ideal purpose is to handle debt and avoid going deeper into it.

We recommend you avoid the ones with rewards and rewards, which will help you prevent the temptation of spending and using them.