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What Happens When a 0% Intro APR Period Ends?

The most common bank offer for new customers is intro 0% APR, which means no interest during 6, 12 or even more months, depending on the credit card. 0% APR can save you money on • New purchases • Balance transfer • Or both It can be useful if you are planning a big purchase or transferring a balance from another card. Remember! You still need to make minimum payments every month. But what happens after 0% APR period ends? Your balance will begin to accrue at the regular rate. Your best interest is to make sure that the balance is not snowballing during the intro period. Otherwise, you will pay a huge monthly interest after the intro period ends. Some credit cards – mostly store cards, have deferred interest offers. If you do not pay off the entire balance by the end of the intro period, or make a late payment, you will be charged interest on the entire intro period. So make sure that you will be able to pay off the entire balance before the deferred interest period ends. Understanding payment allocation When you make a payment, larger than a minimum payment, a credit card company should apply it to the highest APR’s first – according to the law. The problem is that it doesn’t benefit customers on deferred interest plans. For example, your balance is $1000: • $500 is from purchases at 20% APR • $500 is from deferred interest offer at 0% APR If you make a $50 payment: • $8.34 goes to towards interest • the remaining $41.66 will go towards the purchase balance • $0 goes to pay off the balance with deferred interest, until purchase balance is paid off in full Beware of these offers – they are usually advertised as ‘no interest if paid in full in 12 months’ Here are our top credit cards with 0% APR They can be a great help with a proper planning, or a trap if you cannot control your finances. DISCOVER IT -18 months 0% APR on balance transfer -6 months on purchases Citi Simplicity -21 months on balance transfer -21 months on purchases BankAmericard cash rewards -12 months on balance transfer -12 months on purchases Make sure you plan your finances and the end of intro period will not be a bad surprise for you. Read more on CardsMix.com