While zero-interest credit card offers certainly sound tempting, you might be questioning whether there is a catch involved if you receive one. The premise sounds great – these cards allow you to make purchases without paying interest for a certain amount of time. As you might expect, however, credit card companies are rarely acting in your best interests, and this holds true in the case of the no-interest credit card.
Unless you have absolute faith in your ability to pay off your credit card balance in its entirety before your interest-free period ends, you may want to think twice about accepting that offer you receive in the mail. Here are some of the reasons why:
It can hurt your credit
Some people falsely believe that carrying a balance on a no-interest card will not affect their credit score. In actuality, however, a significant portion of your credit score depends on how much money you still owe, regardless of whether you are paying interest on it. Thus, your score can still take a hit if you rack up a considerable amount of your credit limit on your card, even if you do so during a zero-interest period.
There might be hidden fees and fine print
Sure, you might enjoy a zero-percent-interest rate on your credit card for a year, 18 months or what have you, but you would be remiss to assume the no-interest feature applies to every aspect of your credit card. Many cards, and many no-interest cards, too, charge interest on balance transfers and cash advances. Furthermore, you still must make minimum monthly payments with a zero-interest card, and if you do not, you may see that interest rate skyrocket.
These are just a few of the reasons you might want to reconsider accepting the next zero-interest credit card offer you receive. If an offer seems to good to be true, it just might be – especially when credit card companies are the one making it.