Today, people fall prey easily to the many schemes and policies of credit card companies. When you are planning to go for a credit card you will often see that financial companies give you a 0% APR for the first few months. The company suffers loss when they give you a 0% APR but in the long run they plan to recover much more from you. This article is a guideline to help you overcome the various ways financial companies try to rob you when they offer 0% APR.
The Tricks of Borrowing You may wonder how the company recovers its money when they offer 0% APR? Many financial agencies quote 0% rather than 0% APR. The difference is big. When you go for a credit card which has only 0% quoted on its policies rather than 0% APR, it means you are going for a credit card that will cost you more than the one quoted with 0% APR. Many companies will also impose on its customers hidden penalty charges for crossing the credit limit, on annual card fees and balance transfer fees, and so on. It is better that you read the fine print of every financial company very carefully. There are many clauses and conditions when you apply for a credit card. These clauses generally have hidden costs which you should take notice of.
The period for which the 0% APR is applicable is quite less. Once it is over a standard rate of interest charged by the company comes into force and unexpectedly, it is quite high. In order to avoid extra charges, it is always better that you settle the balance when the 0% APR is coming to an end. When you are using the trick of free borrowing make sure that your credit card offers 0% APR. As mentioned, go through the policies very carefully and avoid situations that can enable the company to charge extra. Find out the expiry date and month of the 0% APR. Clear all your pending bills and balances at that time. Avoid using your credit card for normal spending.
Using a credit card having 0% APR has its own benefits and pitfalls. 0% APR is not an answer to your financial troubles. It gives you a false sense of security. It will always encourage you to spend more than necessary even though it is wise for you to save more than you spend. When the standard rate of interest starts functioning, it can cause an expensive problem for you rather than minimize your worries. Last but not the least, a good financial planning is always on the reckoning when you are taking important decisions to do with finances.