What You Should Know About Zero Interest Rate Credit Cards

When credit cards were introduced the rates of interest charged on the outstanding balance were very high. Customers had to pay interest rates as high as 40% on some cards. With the increase in competition and fall in interest rates worldwide, many companies are coming out with offers to attract as many customers as possible. Today credit card companies in an attempt to increase volumes are offering credit cards to customers at very low rates of interest. These low rates of interest is usually for a specific period of time say six months to a year maximum, after which normal rates of interest is charged.

Credit card companies charge interest on your credit card outstanding balance and balance transfers from other credit cards. APR or the Annual Percentage Rates is the interest charged on the credit card outstanding balance. To arrive at the monthly interest rate the APR is divided by 12. Balance transfer is the transfer of an outstanding balance on one credit card to another credit card. The credit card company which clears your outstanding usually charges you interest for doing so. This interest may either be charged at a flat rate or depending on the amount of the outstanding balance.

Companies worldwide, in order to increase their customer base, are coming out with very attractive low interest rate offers. Citi Platinum for example is offering cards at 0% interest where the average APR works out to be 16.9% and Discover Platinum is also offering 0% interest on their cards with the average APR of 10.99%. These credit cards are a sure hit with customers as they are able to get credit at very low rates of interest.

Customers can also save interest by transferring their outstanding balance from one credit card to another. Credit card companies usually charge interest for paying off your outstanding balance on the source credit card. Credit card companies in order to attract customers may offer them balance transfer at 0% rate of interest. This 0% interest on balance transfer is usually for a limited period of time after which interest is charged at normal rates.

These low interest credit cards are usually offered to customers who have a high credit score. The companies usually have an option of terminating the offer if they find the customer has defaulted on payment of dues. On the other hand the offer may be extended if they feel that by increasing the duration of the offer they will be able to maintain customer loyalty.

There are a few things that you should remember before getting yourself low interest rate credit cards. In 0% interest credit cards you are exempted from paying interest but not on late payments. If you pay the amount after the due date the credit card companies will charge you late payment fees which can be as high as 20 dollars. Some cards may also charge an annual fee to issue the card which may be so high that it may negate the benefits of interest saved. Some companies who do not charge any interest on balance transfer may charge processing fee. This processing fee can be as high as 4% on the amount transferred. Therefore it is very important that we clearly understand the terms and condition of these low interest rate credit cards. It is always better to be aware than to regret later.