0% Apr Credit Card Applications Explained
For the past decade, credit card companies have relied on the 0% APR offer to lure in new customers. Although this tactic has been used less since the recession of 2008, most credit card companies still rely on eye catching 0% APR deals to generate new business. Unfortunately, many of the long term 0% interest rates advertised aren't quite so long term. In order to determine if a 0% APR for 1 year is truly a 0% APR for 1 year, you've got to take a look at the credit card application's fine print.
The credit card companies CardWisdom likes are very straightforward about 0% APR offers. These companies advertise and deliver on the rates promoted in bold print on their credit card applications. Here's an example of the fine print of a straightforward 0% credit card application:
Example 1: 0.0% for 6 months (on purchases) from the date of account opening;* then the standard APR and 0.0% for 12 months from the date of account opening for balance transfers made within 15 days of application
Here the credit card company, Discover, clearly lays out the length of the 0% introductory period for both purchases and balance transfers. Also, unlike many other credit card companies, Discover lists these terms on the application page, not on a separate terms and conditions page. This transparency is rare in the credit card world, as you will see in the next example from a credit card application that offers a 0% APR for "up to 15 months" on purchases and balance transfers:
Example 2: 0.00% for 15 months from date of account opening for APR 1. After that, 11.99% variable. 0.00% for 7 months from date of account opening for APR 2. After that, 15.99% variable. 0.00% for 7 months from date of account opening for APR 3. After that, 19.99% variable.
As you can see in this example, the headline interest rate of 0% for 15 months is only available to people who qualify for APR 1. The criteria for qualification aren't particularly clear, but it is safe to assume that only people with superior credit scores will get the full advertised offer. The remainder of applicants will get a 0% rate that lasts less than half of the advertised rate. Unfortunately, if you fail to click on the terms and conditions link on the application page, there's a chance you could overlook this very important clause.
As you can see from the two examples provided, there can be a substantial difference between the 0% interest rate period advertised on a credit card application and the 0% rate you actually get. Sticking with transparent credit card companies is one way to avoid sticker shock. Another is to avoid offers that advertise 0% rates for "up to" a certain number of months unless you have pristine credit. Ultimately, the key is to be vigilant when reading the fine print. That way, you stand a good chance of finding the best credit card offer and avoiding fine print tricks.
