Why You Just Might Get 0% Interest on Your Next Credit Card
No interest on a credit card sounds too good to be true.
And we all know what they say about things that sound too good to be true: that they usually aren’t.
In this case, 0% interest on a new credit card is true … enough.
Bankrate.com reports that a July survey from its site CreditCards.com found that about 40% of major credit card companies now offer an initial 0% interest rate on new cards.
The Wall Street Journal adds that this policy may be combined with other promotions such as no annual fee, cash-back rewards, airline miles and bonus points on gas or drugstore purchases and that these deals may be offered to people with FICO scores between 621-699.
But there’s a catch, right? (There’s always a catch.) These low-interest cards only benefit you if you are completely responsible with your card: If you slip up by missing or being late with a payment, or by losing points on your credit score, you could incur a 10%-25% interest rate. And carrying a balance is especially fraught. If you don’t pay it off during the promotion period, you can be hit with retroactive high interest rates that apply to the starting balance of your card, including the amount you’ve already paid.
Think it could never happen? Be forewarned: 30%-60% of customers who enter the promotion will lose the 0% rate before the promotion ends due to irresponsible credit card practices.