0% Credit: Zero percent credit cards in 2014: Costingless.com


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How you can save money by using 0% credit card deals and balance transfers


Credit card options for you in 2014

It's worth mentioning that some of the best ways to get credit, and at an excellent rate (maybe even zero percent!) could be by taking out a 0% credit card.

However, what is a good credit deal for you may not be a good credit deal for me, and vice-versa, so I'm going to emphasize that how you can best profit from the amazing array of credit card deals available depends entirely on your situation.

First: Do you already have a credit card? This is important, because if you do, then, rather than taking out a brand new shiny credit card with 0% on purchases, you might consider if you'd be better off instead looking for a credit card that offers 0% for balance transfers for an extended period.

You could transfer any existing credit card debt from where the 0% period is expiring, to a new one that effectively extends the amount of time you get to pay back the original balance, but without incurring any extra interest. The number one rule, if you take the route of a credit card balance transfer is *never make any new purchases on the new card*. Just because the interest rate on the balance transfer may have been 0%, it is rare indeed to find that the interest on new purchases is also zero percent!

Situation A: No existing credit card

If you don't have any credit card right now at all, but are looking for ways to borrow money as a short to medium term solution, then this is certainly the simplest to explain: Basically you will want to find a 0% credit card - for new purchases - with the longest interest-free period that you can find. As a guide, you will know that you have found a good 0% credit deal (in the current economic climate) where the 0% interest period is in the range of 12 to 24 months.

Some special deals you may find may also offer cashback on the purchases you make with the credit card, though typically you will sacrifice interest-free time if you go for this option.

The key thing to remember with any credit card that is 'giving' you 0% on new purchases, is that you absolutely *must* pay the minimum payment each month as you go along. Do not skip any payments, or make any late payments -- you could, and probably will, lose the 0% interest in this situation. And then you will find the standard interest rate, which is significant, is suddenly applied to the whole account, not just for the month you missed! If you are not a financially disciplined or well-organised person, able to make the minimum monthly payment before or on time, each month, then do not even consider a 0% credit card for new purchases -- it's not for you!

Key point #2 for 0% for purchases credit card holders is that you also have to plan ahead to ensure that you are in a situation to be able to pay off the debt, in its entirety, before the 0% period ends. For those with a good credit rating, there may be nothing stopping you from following this guide, and applying for a 0% for balance transfers card, though you shouldn't rely on this as a payback strategy. What happens if there is a major credit market shift between now and when your 0% period ends? Although its unlikely, a worse-case scenario is one where balance transfers become suddenly unexpensive, or unavailable? Make sure you have a 'plan b' to get the debt paid off in time!


Situation B: You have a credit card already with an outstanding balance.

Here, you will definitely need to make sure you are looking on the web for the best credit card for balance transfers. What you need to do, before the 0% credit period is up on the existing card, is to transfer the outstanding balance to the new card. Note that you may have difficulty doing this if you have a poor credit history, so this isn't always an option.

This is why it's a good idea to have a very good idea of your current credit rating, or credit score, at any given time. See my credit rating guide for more info on this. Crucially, on a balance transfer card, the percentage of interest payable on any new purchases will almost certainly be quite high, so you should avoid making any new purchases on the balance transfer credit card.

When transferring the balance, don't forget to allow plenty of time for the transfer to take place, and remember that there is often either a one-time fee levied for the transfer itself, which may be in the form of a percentage of the balance you are transferring to the new credit card, or perhaps a one-time fixed fee. You need to account for this in your calculations.

In any case, if you already have savings, its always best to use those, rather than get a credit card in the first place. The reason for this is that the savings account interest rates (even tax free ones) are currently offering such a poor interest rate, that you cannot hope to offset against credit card rates, which, on average, are still massive compared to the interest you would earn if you left the money in the savings account!

0% credit cards advice: Summary

Whether you are thinking about getting a credit card for the first time, or if you have read my guide to make sure you are getting the best deal possible, I hope you found my guide useful. As the credit landscape changes, I'll be sure to update this article to reflect this.