2 Big Risks of 0% APR Cards

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  • Some credit cards offer 0% introductory interest rates.
  • These 0% APR cards can be a good option to finance purchases over time.
  • They do carry some risks, though, including the possibility that you will charge more than you can pay back. 

Don't sign up for a 0% APR card without evaluating these risks. 

Credit cards are known for their high interest rates, but there's an exception. Some cards offer a 0% introductory rate on purchases. If you sign up for one of these cards, you may not pay any interest at all on things you charge for a set period of time, such as the first 12 months that you have the card. 

Being able to finance large purchases at 0% can be a great thing if you need to pay for items over time and don't want to pay interest. But before you sign up for a 0% APR card, you need to be aware of these two big risks. 

1. You may be tempted to charge too much 

One big isk of a 0% APR card is that the promise of no interest charges can tempt you into using your credit cards more often than you should. Charging too much could lead you into credit card debt, which can make your future financial life more difficult.

It's important to remember that you still have to repay the entire amount you charged, even if you don't owe interest on the purchases you've made on the card. This means you'll be committing future income you haven't yet earned to paying for the purchases you make today.

To avoid getting out of control on your spending when you get a 0% offer, you'll want to make sure you stick with your budget. Any charges you make, be sure you have the money in your bank account or a plan to get the funds and pay off the card in a timely manner. 

2. You may get stuck with high interest charges if you can't pay back the money before the promotional rate ends

The other big risk of a 0% APR card is that you may actually end up paying interest after all. This could happen if you don't manage to pay off the entire balance before the promotional rate expires.

Credit cards have high interest rates when the 0% rate isn't in effect. Usually, you will have just a limited amount of time such as 12 months or 15 months when you aren't being charged the standard interest charges on the card. If you don't fully repay your purchases by the end of this promotional period, you could get stuck paying a lot of interest on any remaining funds that are due.

To avoid this, you will want to make sure you stick within your spending limits and are careful to only charge as much on the card as you are confident you can pay back before the 0% promotion ends. By tracking your spending carefully and making a repayment plan, you can make sure that high financing charges don't make the things you charged more expensive in the end.

As long as you have a spending plan and you won't charge more than you can repay before the promotional rate ends, a 0% APR card can be a great way to pay for things over time. But you'll want to be aware of these two big risks before applying for this card type so you can make sure you're able to mitigate them.

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