The Basics of 

Zero Percent Credit Cards

Do you really know what zero percent credit cards are and how they work? Sure you have heard of them but you may not really know all you need to know. The APR stands for annual percentage rate. It refers to the interest rate that is applied to your balance on the credit card. The monthly payment is based on the APR or interest rate and how that interest is figured, which differs among credit card companies.

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With a zero percent credit card offer, you do not pay any interest for however long the introductory period is. A good 0 APR credit card will have that low rate for a year (many are only for a few months). Once that year is up, the interest rate goes up to whatever the standard interest rate is. When credit card companies offer this great low rate, they are taking a risk. That is the reason you can only qualify for a zero percent credit card if you have a really good credit score.

How Is Your Credit Score

Figured?

There are a lot of different things that make up your credit, or FICO, score. This score is used in the United States to determine a borrower’s credit worthiness. You cannot qualify for a 0 APR credit card if you don’t have good credit so you have to understand how your credit score is figured so you can maintain a good credit score.

There are five things that go into figuring your credit score and the ones with the most weight are how much you currently owe and how well you have paid your debts in the past. The other things that go into determining your credit score are how long you have had a credit history, how much new credit you have, and what kinds of credit you have used. These all go into figuring out your credit score, which can be between 300 and 850. Your credit score tells creditors how credit worthy you are. If your credit score is over 770, you should be able to get a zero APR credit card. Any credit score above 700 is a good score. If you want to get a 0% APR credit card, you have to have at least very good, if not excellent, credit.

A popular way to use these zero percent credit cards is to transfer balances from higher interest rate credit cards so that you can save money on interest and finance charges. This is a great idea if you are able to qualify. After the zero APR rate expires, though, the interest rate will go back up to the credit cards regular rate. Some people keep transferring their balances to a new credit card with a 0% APR but this can potentially be bad for your credit score.

It Pays to Be Careful with Your Credit

You need to know about things like a universal default clause. That refers to a clause that says not paying any of your creditors, like a loan from a bank, will change your credit score and that can affect your interest rate on other credit cards. The best credit card companies will give you all the information you need so you can make a good decision.

A few of the zero percent credit cards offer other benefits as well. If you search online, there are many different offers for zero APR credit cards to choose from. You have to make sure you do your research and find the right credit card for your needs and also to keep your credit score up so you can qualify for a 0% APR credit card in the future.

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