Zero percent balance transfer card charge zero interest for a certain timeframe to encourage customers to use the card. No interest will accrue on the balance when you leave the balance to roll over to the next month. This gives you a peace of mind to come up with the money and pay back the outstanding balance.
Most of the intro promo will last more than 6 months. If you visit the credit card comparison site, you will see a lot of balance transfer cards offering 15 – 18 months zero percent intro promo. There is only one card with 21 months intro promo, the Citi Diamond Preferred. You can use this type of card to consolidate your existing credit card debts with moderate or high interest rates. It is also suitable for funding a large purchase if you can pay back within the zero percent promo period.
The zero percent promo often causes people to forget about other costs that come with the card. Balance transfer cards may charge balance transfer fees and other fees like administration fee, late fee, penalty rate and etc. You must make sure that these fees do not exceed the interest that you would save when you use the card to repay your debt.
If you want to apply for a card with long promo, you will need to have a good or excellent credit score. You can request for a free credit report from the credit bureau to check and see if you have good credit score. As a rule of thumb, you should get preapproved for 3 – 4 balance transfer cards and then you can slowly do research on their features to decide which one is the best to sign up.
Your zero percent balance transfer card may have a rewards program that can let you earn points. It rewards you with either a flat rate or based on spending in quarterly rotating bonus categories. You can check how much points you have accumulated by logging into your account. Points earned can be exchanged for cash back or statement credit or free flights or hotel discounts. The rewards program may have spending limit or minimum redemption requirements. You should understand how the rewards program work and work out whether how much money you could save from it.
It is important to note down the last day of the intro promo period. In this way, you can budget accordingly and pay down your debt in full by the time the intro promo period expires. If you decide to consolidate your debt with a zero percent card, make sure you have enough revenue to fully pay back the debt by the time the promo period expires.