Zero credit card is used in situations where you want to make a big purchase or reduce payment on high-interest charges on your credit card debt. 0% interest on credit card and balance transfer can tempt you to overspend especially during the holiday season.
Pros:
1. Travel insurance: Many credit cards offer travel insurance to the customers as a bonus and this can be a great advantage if you travel a lot. Top-tier credit card customers can benefit from 0% credit cards although terms and condition apply on the amount spent.
2. Paying down debt: Transferring credit card balance to a new card at 0% is a great way to get on top of your debt. You will transfer money at no extra charges.
3. No interest for a set window: Zero credit card means you will pay zero interest on purchases for a certain period of time. Most of the credit cards offer 0% for 6 to 18 months and sometimes on balance transfers.
4. Ideal for large purchases: If you’re planning to make a hefty purchase and need time to pay it off, then 0% credit card will be ideal for you. You can make your purchase and reschedule repayments with no interest for a certain period.
5. Better deal: If you have been loyal to your bank institution, you can negotiate for a better deal on the products offered and enjoy the benefits.
6. Reduce high-interest balances: If you have high-interest credit card debt, you can transfer it to 0% credit card on balance transfers. This gives you enough time where all payments will go to settle the debt and no interest that will accrue on the balance.
7. Better terms: It allows you to move your credit balance to a credit card with better terms and close your old credit card account with bad terms.
8. Rewards: If you have a new 0% credit card with good terms, you can receive credit card rewards on any new purchase.
9. You can consolidate credit card debt: Consolidating your credit cards or moving multiple credit cards to a single credit card enables you to make payments to a single credit card every month.
10. Supplement income: 0% credit card can be used to supplement your income by getting funds to clear your bills between pay periods.
Cons:
1. Short-term: APR doesn’t last long, once the 0% introductory period is over, the card will revert to its regular rates based on your creditworthiness. 0% is only for a short period of time.
2. Pay balance transfers: Even if you have 0% credit card offers on balance, you will be required to pay the balance transfer fee.
Your 0% credit card will attract a 2% balance transfer fee.
3. High-interest rates later: At the end of zero credit card promotion, you may end up paying more on interest for cash advances or new purchases. If you change your card to 0%, make sure you pay off your card before the new interest rates.
4. Annual fees: Zero or no rate cards always incur annual fees of $40 to $99 per year. You can be subjected to late payments fee, merchant fees, and dishonor fees.
5. Balance transfers not included: Not all credit cards feature 0% on balance transfers others offer the option on new purchases with the card.
6. Lose the bonus: Once you sign-in for 0% credit card, you have to agree with terms of the card issuer. If you make late payments, the issuer has the right to end the introductory period and sometimes given a penalty.
7. Expensive balance transfer: The full cost of moving the balances can sometimes be high in the long-run compared to interest fee paid if the amount is left in the old credit card.
8. Affect credit score: Having several credits cards, a lengthy payment history, and the amount owed can affect your credit score.
9. Overspending: Borrowing funds for certain purchase or using 0% credit card to supplement your income can lead to overspending.
10. High cost of borrowing: Compared to traditional loans, the cost of borrowing through 0% credit card is very high.
