Anyone who has credit card debt knows how it can quickly cripple their finances. Many cards have high interest rates, and those who continue to use their cards rack up interest charges on each new purchase from the day of the transaction.
But what if cardholders could eliminate all of these interest charges quickly and easily? Many cards on the market feature up to 18 months of interest-free financing on both new purchases and balance transfers. The problem is that some cardholders dismiss these offers as too good to be true.
How these offers work
Credit cards with promotional financing typically offer new cardholders zero-percent APR on new purchases and balance transfers for a limited time.
The law says that the minimum length of these promotional financing offers is six months, but the longest offers currently available last 18 months. Unfortunately, nearly all zero-percent APR balance transfer offers require the payment of a 3 percent “balance transfer fee” — so this benefit isn’t really free. Although no interest will occur during the duration of these offers, standard rates will apply from the day the offer expires.
Is promotional financing right for you?
Promotional financing offers can be extremely attractive, but they don’t make sense for all credit card users. First, cardholders must have to have an excellent credit history in order to qualify for most of these offers. Next, cardholders who are able to pay off their debt within just a few months are usually better off doing that rather than transferring a balance and incurring the standard 3 percent balance transfer fee.
Finally, there are problems with promotional financing offers when they induce cardholders to spend more and incur more debt. The prospect of buying now and paying later without incurring interest can be a powerful incentive to overspend. In addition, suspending interest charges on balance transfers can make it too easy for cardholders to put off paying down credit card debt indefinitely. But that’s not a problem with credit card interest rates, that’s ultimately a problem with the cardholder.
Therefore, promotional financing offers are best used in combination with a sound plan to pay off your debts before the promotional term expires. By using the limited time of these offers as a deadline to get out of debt, rather than an excuse to postpone repayment, these offers can be used as a lifeline rather than a tool to enable more debt.
Choosing the right promotional financing offer
There are so many cards that feature zero-percent APR financing that it can be difficult to find the right one for you.
First, those with credit card debt should exclude reward cards from their consideration. These cards tend to have less attractive promotional financing terms and higher standard interest rates than non-reward cards.
Next, look for the longest promotional financing terms available. A few cards feature 18 months of interest-free financing on both new purchases and balance transfers, and many more offer 15 months of promotional financing.
Finally, remember that balance transfer offers can only be applied to a card from a different issuer. So if you already have debt on a card issued by Chase, you can’t transfer it to a Chase Slate card.
Best zero-percent APR balance transfer offers right now
Chase Slate — Slate is the only card currently available with zero-percent APR balance transfers and no balance transfer fee. You receive 15 months of interest free financing on new purchases, and there’s no annual fee.
Citi Simplicity — Citi offers 18 months of interest-free financing on both new purchases and balance transfers, with a 3 percent balance transfer fee. There are no late fees, penalty interest rates, or annual fees.
Amex EveryDay — This new card features 15 months of interest-free financing on both new purchases and balance transfers, with a 3 percent balance transfer fee. Earn points in its Membership Rewards program, which can be redeemed for merchandise, gift cards, travel reservations, or frequent-flier miles. No annual fee.
Interest-free promotional offers are legitimate, and they are the best way for most cardholders to save money on interest and pay off their debt sooner.
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