How to Pick the Right Zero Interest Credit Card

Choose a card that suits your purpose. What would you do with your new zero interest card? Credit cards that have 0% APR on balance transfers are great for paying off balances from high rate cards. This way, you can focus on paying only the original amount of debt you owe minus the additional interest.

Choose a card with reasonable costs. Aside from the zero interest, don't forget to check all the other costs associated with your card. For example, does it carry an annual fee? Most reward credit cards with zero interest have higher annual fees.

Annual fees can range from $50 to as much as $80 or even more. If you'll need to pay $80 each year just to keep your card active, would it still be worth the deal? Would the cost of annual fee offset the savings you get from the free interest?

Choose a card with reasonable interest that lasts. How much would the interest be after the introductory period? Make sure that the APR would remain reasonable for a longer time. If a card offers zero interest for 6 months, see to it that the APR would still be low after 6 months.

Choose a card with sufficient grace period. The zero interest offer will not last forever. It's important to get a card with a sufficient grace period so that when the introductory period expires, you'll have more time to pay off your monthly charges without incurring the interest. Ideal credit cards should have at least 25 days to 30 days grace period.

Know the exact type of APR offered. Some cards have more than one APR. The zero interest may either apply to purchases or balance transfers or it may apply to both. You'll need to be very clear about which interest rate applies to which transaction.

Also, the interest for cash advances is usually different and much higher than the APR applied for purchases and balance transfers. Therefore, be careful about using your credit card for taking out cash advances from the ATM. If you do, you instantly incur the extra interest on your bill the moment you take the cash.

Know the credit requirements of your chosen card. It is worth noting that credit cards with zero interest often require good to excellent credit.

• Do you think your credit rating is good enough to get approved?
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• Have you checked your credit report?

Bear in mind that if you have bad credit, chances are your application would be declined. Consequently, declined applications can only cause more damage to your credit. If your credit rating happens to be average or below, it's never too late to start taking positive steps to raise your score.