Jul 13

Written by: Matt M
7/13/2008 7:47 PM

Paying a zero-percent introductory rate on a credit card can be a super deal but you'll need to be careful -- very careful. One misstep and you can kiss that interest-free period goodbye. Let's say you manage to land a zero-percent credit card deal. Congratulations. But before you go out and celebrate -- grab a magnifying glass.

Is that interest-free introductory period for purchases or balance transfers or both? When does the introductory period end? What kind of interest rate will you pay then?

If the zero-percent teaser rate is on balance transfers only, avoid making any new purchases with the card. Issuers have a policy of applying payments to balances with the lowest interest rates first. You'd have to pay off the entire balance transfer before a single penny gets directed to any new purchases you've made with the card.

Be on the lookout for fees. Some cards charge you a fee for every balance you transfer to the card. Both First USA and Citibank charge a fee equal to 3 percent of the balance being transferred. First USA caps its fee at $35. Citibank's fee is capped at $50. It's best to avoid offers with hefty transfer fees.

You'll also want to be quick with your card payments. Pay late even once and that zero-percent interest rate will disappear for good.

Tags: