In today’s economy, most credit card companies offer either 0 percent credit card offers or fixed rate credit card offers throughout the year for their customers.
Do you know which type of credit card is the best for your situation?
Well in order to figure that out, let’s take a look at the pros and cons of each.
With 0 percent credit card offers, you will pay no interest for a set period of time in which all of your payments will go towards the principle.
After that period of time, the credit card companies will then raise your interest rate to their standard rate. The standard rate for most credit card companies is ridiculously high as it is usually twice the premium rate of a fixed rate credit card running on a variable rate which is the primate rate plus a premium.
This new rate will immediately put your interest rate over the 10% mark and can be as high as 12%. By raising the rate on you, the credit card companies are trying to make their 0% back as quickly as they can.
As for fixed rate credit cards, offers range from low rates of 2.9% to 8.99% of the balance for life. The benefit of having a card like this is apparent; without the fixed rate, most are 12% to 23% variable for life.
In this case, variable simply means the rates fluctuate as the federal government raises and lowers the prime rate. One benefit of owning a fixed rate credit card is that you expect to reasonably cut your interest rate each month by at least half of what you are currently paying each month. In other words, you are reducing your principle at a greater rate that you were previously with the same or smaller payment.
A good number of credit card companies will present both 0 percent credit card offers as well as fixed rate credit card offers. You must decide on which type of card is going to work for you. In order to help you make this decision, I have compiled some general information on both types of cards to help you.
If you know that you will not pay the balance of your credit card off within a year, but will make sure to transfer it to another 0% card before the time frame specified, 0 credit card offers would be a good fit for your financial needs.
If you are unable to secure a credit card with a high enough balance, try using multiple 0 percent credit card offers, or try to use fixed rate credit card offers to cover the difference.
On the other hand, if you take an honest look at your spending and payback habits and you are sure that you would not transfer a 0% rate balance before your timeframe ends then I suggest that you avoid 0 percent credit card offers and go with the fixed rate credit card offers. The reason for this is due to the fact that the premium that is applied to your account after your introductory period will negate the benefit of the 0% over time.
One word of advice that I have for you is to make every attempt to always make the current payments that you are making now on a monthly basis. Whatever you do, avoid decreasing the amount as your minimum payments go down. With habits like this, you will be paying off your debt in no time at all.
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