0% APR Credit Cards: A Tool To Eliminate Debt

It is entertaining to note that what started off as a marketing gimmick has now turn an almost permanent part of the credit card industry in America and today 0% APR credit cards can in reality play a meaningful role in helping a person reduce or get out of debt.

What Is A 0% APR Credit Card?

APR is the annual interest rate known in industry jargon as the Annual Percentage Rate. It is a reflection of the cost of credit. In the old days everyone paid a standard APR based on bank rates. It was generally about 18 per cent. The use of low APR came with the outgrowth of the monoline bank. These were banks that only produce credit cards and did not take any deposits or issue conventional loans. For their business model to work well large numbers were essential for these breed of initiative bankers and credit cards issuers so low APR teaser rates were successfully used to lure as many new card users as possible.

The gimmick sounds to have worked so well that today it is hard to find a credit card company that does not offer some type of incentive APR during the first 6 months or one year. The more famous credit cards offer 0% APR for the first year.

Usefulness Of A 0% APR Credit Card In Reducing Debt

A 0% APR credit card can be too much useful for somebody who wants to lessen their large credit card debt. For a chance if you have a credit card debt that remains at about $10,000 and the APR is 20% then you will end up paying a whooping $2,000 in interest payments alone. With a 0% APR credit card the $2,000 could all go towards lessen that crippling debt. It is therefore clear that 0% APR credit cards can offer much needed financial breathing room for somebody in a serious credit card debt situation.

Consolidation Or Transfer Necessary To Benefit From 0% APR Credit Cards

Moving a credit card debt or credit card debt consolidation are all-important first steps that will need to be obtain before a person in deep credit card debt can enjoy the profit of a 0% APR credit card. The objective here would be to have all the person’s outstanding debt payable to one credit card company and at a 0% APR rate.

The value of 0% APR credit cards in helping an individual or business to get out of credit card debt cannot be understated.

Even though many potential card users place a lot of value in being able to obtain a 0% APR credit card, the truth of the matter is that it is only alluring and beneficial to two groups of people. Firstly persons able to reside their credit card balances on a month to month basis to whom the 0% APR rate means that their cost of keeping a credit card is very minimal. Secondly those in debt also benefit because the 0% APR credit card greatly assists them in their efforts to reduce their debt.

Copyright 2005 Ed Vegliante.