A card that can be used to shop and borrow money on credit is known as credit card. These cards are issued by the banks, few retail stores and other chain businesses. The cardholder can clear the debts by paying the credit card issuing bank either the entire balance or in installments with interests. Zero percent credit cards is the offer that claims to benefit the customers. These offers attract the customers in transferring their debts from the high interest credit cards to zero interest credit cards.
how do the credit card companies get benefitted from this??
Zero percent credit cards provide an introductory period which is free from interest. If the cardholder fails to clear the debts within the period, the interest adds to his principle amount and generates money to the credit card company. Other than the interest other fee like late payment fee, over the limit fee and balance transfer fee are also collected. All the other transactions made after the introductory period always have a high interest rate.
How can the credit card holder get benefitted from this??
If the zero percent credit cards are used wisely, they can be cheaper than loans. When the customer gets a zero percent credit card and spends using that card, he has to ensure that he makes the repayment before the introductory period ends else transfer the balance to a new card with zero percent transfer deal. If the payments are still not paid, shift them again.
Before balance transfers ensure that the balance transfer fee is not higher than the interest rates. It is always wise to transfer the funds that can be repaid immediately within the introductory period which is free from interests. Few cards have different expiration dates for balance transfers and credit purchases. This should be clearly understood before using the card. Most of the times balance transfers and credit purchases have the same expiration dates.
There are certain credit cards where the customer has to make minimum number of purchases to remain in the introductory period. This will increase the balance that have to be paid. If they are not cleared within the period, high interest rates will be added. Therefore these kinds of zero percent credit cards should be avoided.
Before deciding on a zero percent credit card thorough research should be made and the card should be used wisely. These cards are incredibly beneficial when used properly following all the guidelines else increases the debts.