What began as a gimmick for marketing credit cards has now grown to be a very sought-after asset to owning a credit card these days - that of the 0% credit cards or 0% APR cards. In fact, it can be instrumental in helping someone with credit problems to reduce debt significantly, if not totally!
So What Are 0 Credit Cards?
APR or Annual Percentage Rate reflects the cost of owning and using credit. This could be in the form of credit cards or a loan or another type of debt.
In days gone by the Annual Percentage Rate was based on bank rates and was usually somewhere around 18 per cent as standard.
Then came in what was named the monoline bank, which were banks that would only issue credit cards and did not handle conventional loans or deposits. For this to be successful though, it was very important that the monoline banks issued large numbers of credit cards to the consumer and as such the APR was lowered as a method to entice customers to take out at least one credit card.
As such, the APR was reduced from that of 18 per cent, more towards the levels we are familiar with today.
Due to the huge successes of the monoline banks and the low APR credit card, these days it’s relatively commonplace to find 0% credit cards offering incentives of zero per cent introductory periods from 6 months right up to 18 months.
How Do 0% Credit Cards Reduce Debt?
For those people who are looking at either reducing debt or wiping out debt completely the 0% APR credit card can be an extremely useful tool!
As an example, if you are in the habit of carrying a substantial balance month to month, say $10,000 or thereabouts, and say your APR is running at about 20 per cent, which is certainly not unheard of and quite often it’s a rate above that of 20 per cent, it’s plain obvious to see that this would add a further $2000 to your credit card bill for the year!
With the 0% balance transfer credit card at your service, well, there’s a nice sum off your yearly bill for starters! What’s to stop you moving on year to year from card to card?
Even in these current times of financial turmoil and although the credit card companies in general are tightening up big time on their lending, there are still many fine deals to be found if you take a little time to assess the credit card market place.
There’s more to learn about 0% credit cards and how they can be used to benefit you and help you to meet your financial needs 0% balance transfer credit card.
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