Zero % Credit Cards - Debtors Heaven or Debtors Hell

There are now several major issuers including American Express, Discover Card and Citibank who are promoting credit cards which have 0% interest rates. If you are in debt a Zero % card can be fabulous way to pay off your creditors and balance your finances but you need to be careful -- there are strict rules you must follow or you are going to find yourself in even more hot water in a hurry.

Credit card issuers are not stupid; their goal is to make a profit. It's pretty obvious that the credit card companies are banking on the fact that many of the people who opt for the Zero % credit cards are likely to be those who have irresponsible spending habits and are likely to slip up. If you think you might be one of those people, think very carefully before going for these cards. Many people get so excited by the idea of an interest free credit card that they forget to pay attention to the fine print. The same principle was used by car dealerships a few years ago when they lured customers in with 0% financing “deals” and then overcharged them on the actual price of the car.

Right for some, not for Others

Particularly if you have a poor credit rating you need to be careful about the terms of your agreement. Often times that 0% interest rate only applies during a limited introductory period and then switches to a much higher percentage. Other companies charge well hidden transfer fees while others are excellent - until you miss a payment - and then they go for the kill. You are safe as long as you don't slip up, but the card issuers are counting on the fact that many people will. Late payment will result in extortionate interest rates and fees being levied before you can say “no more interest!”

Don't let any of this dissuade you - zero interest credit cards can be a great way to manage your debts and stop paying interest on your purchases - but only if you think that you have the organization and self-control to ensure that you always make your payments on time. I think before purchasing one you must be honest with yourself about whether or not it’s right for you. If you have a good credit rating and are well-organized then they can be a godsend (as long as you read the fine print first!), but if the reason you are in debt in the first place is because you've forgotten to make payments on time then you may want to consider some of the other debt management options available.