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By Ed Vegliante
It is interesting to note that what started off as a marketing
gimmick has now become an almost permanent part of the credit
card industry in America and today 0% APR credit cards can in
fact play a significant 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 everybody paid a standard APR based on
bank rates. It was usually about 18 per cent. The use of low
APR came with the emergence of the monoline bank. These were
banks that only issued credit cards and did not take any
deposits or issue conventional loans. For their business model
to work well large numbers were important for these breed of
pioneering bankers and credit cards issuers so low APR teaser
rates were successfully used to lure as many new card users as
possible.
The gimmick seemed to have worked so well that today it is
difficult 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 popular 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 extremely useful for somebody who
wants to reduce their large credit card debt. For instance 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 reducing 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
Transferring a credit card debt or credit card debt
consolidation are all-important first steps that will need to
be taken before a person in deep credit card debt can enjoy
the
benefits 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 importance of 0% APR credit cards in helping an individual
or business to get out of credit card debt cannot be
understated.
Although many potential card users place a lot of importance
in
being able to obtain a 0% APR credit card, the truth of the
matter is that it is only attractive and beneficial to two
groups of people. Firstly persons able to settle their credit
card balances on a month to month basis to whom the 0% APR
rate
means that their cost of maintaining 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.
About The Author: Ed Vegliante is the owner of
www.credit-card-surplus.com , a well organized credit
card directory enabling the user to compare and apply for a
variety of credit credit card offers. Find links to secure
online credit card applications.
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