Using Zero Interest Introductory Offers to Your Advantage

                                                                                         

As consumers we are constantly bombarded with offers and incentives to attract our business, and most of the time the solicitations are nothing more than basic junk mail. But sometimes an offer comes along that looks too good to be true, or at least too good to resist. Zero interest offers are one of the most alluring, and for good reason. If you use them carefully, they can definitely work to your advantage.

Most zero interest offers for purchases of big ticket items like automobiles should be carefully evaluated, because they often include complex legal and financial language to spell out the terms – which in the end normally favor the company offering them. If you are presented this kind of deal, run it past an attorney before signing, and have the attorney advise you regarding exactly what you are getting yourself into and how much you can benefit once everything is said and done.

For credit card offers, which are more common, you’ll need to read the small print and study the offers until you’re confident that you know the terms, especially regarding two major stipulations. The first is the expiration date of the offer. Most of these are simply introductory offers, meant to capture your business. After a period of a few months, many of these revert to high interest rates, sometimes jumping from zero percent to 18 percent or more overnight. If you use these offers, be sure to pay off any outstanding balance you might have that is subject to the rate change, before the introductory offer expires.

Other offers allow you to keep the zero interest, as long as you use it only for the purpose of transferring your balances from cards issued by competitors of the card making the offer. This can be an easy way to reduce your debt. If, for example, you have a $2,000 balance on a card that charges 12 percent, you will have to pay about $120 per year in interest. Switch that balance to a zero percent card and you can save $120 a year.

The second most important thing to watch for is service charges, transfer fees, and other miscellaneous fees. Even offers of zero percent will usually charge a percent – up to $50 or $75 per transaction – for things like cash advances. And on top of the fee, they will charge you interest. For example, if you borrow $1,000 as a cash advance, but your credit limit is $1,025, they might tack on a 50-dollar fee and then you’ll be over your limit. Because you are over limit, you can be charged interest and fees that might add up to a major expense.

Study the small print or have it interpreted by someone who is expert at legalize, and then only take the offers that deliver real financial incentives.

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