Tags: credit cards | debt | credit score | zero percent

Times of London: Beware of 0 Percent Credit-Card Offers

Times of London: Beware of 0 Percent Credit-Card Offers
(Dreamstime)

By    |   Wednesday, 10 May 2017 12:20 PM

Consumers need to be wary of banks that offer credit cards with tantalizing zero-percent interest rates, The Times of London reports.

“There’s no such thing as free money, yet many people think otherwise when it comes to zero percent credit cards,” the newspaper says.  “What may seem like an enticingly good deal can easily land you in more debt.”

Consumers are loading up on credit cards that have teaser interest rates of zero percent on balance transfers from, according to the British Bankers’ Association. Transfers of 1.34 billion pounds ($1.73 billion) in the U.K. were recorded among 609,000 transactions in March.

But consumers can end up in trouble when the promotional period ends, and interest rates jump to 15% a year or more.

“Many customers end up with more debt because there is no incentive to repay, and they can easily be caught out by not being able to transfer the balance to another product at the end of the interest-free period,” Antony Elliott, the chief executive of the Fairbanking Foundation, told the newspaper. “There are also traps in that if a payment is missed, or a limit exceeded, the zero per cent interest phase ends immediately.”

Other cards offer interest-free purchases for 20 months or more, but unpaid balances can accumulate interest retroactively, putting borrowers deeper in debt.

 “There are hundreds of credit cards with eye-catching zero per cent deals on purchases and balance transfers for a significant amount of time,” Charlotte Nelson of financial data analyst Moneyfacts told the newspaper. “If used correctly, they can be money savers. However, if a borrower fails to pay off the balance before the deal ends they can end up with high charges on the remaining debt.”

Some people damage their credit scores by continually applying for new cards to roll over debt.

“The key to the best deal is the balance transfer fee — the lower the better,” the newspaper reported. “You should consider three factors for distinguishing the best deal: the reward or cashback scheme, the maximum interest-free days, and the “revert to” interest rate that kicks in once the promotional offer ends.”

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Consumers need to be wary of banks that offer credit cards with tantalizing zero-percent interest rates, The Times of London reports.
credit cards, debt, credit score, zero percent
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2017-20-10
Wednesday, 10 May 2017 12:20 PM
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