- Major credit card companies, department stores and even gas card issuers offer promotional interest-free credit lines to prospective customers. Generally, the interest-free rate applies to new purchases or balance transfers from existing credit cards. Occasionally, credit card issuers offer the introductory rates on cash advances through convenience checks, but read the contract terms carefully to verify which purchases or transfers qualify for the interest-free rate.
- Nine-month interest-free credit cards allow consumers to make purchases or transfer balances with no interest fees for the specified period. In addition to the ability to make credit purchases with no interest, transferring balances from high-interest rate cards to "teaser rate" cards can help you pay off debt faster as your monthly payments are applied directly to the balances rather than interest fees.
- Before accepting a new credit card based on a temporary low interest rate, find out what the regular interest rate will be once the nine-month period ends. Under the 2009 credit card act, the account terms, including regular or default interest rates, must be stated clearly and conspicuously with the initial offer. Additionally, opening new lines of credit will affect your credit score. The Fair Isaac Corporation (FICO) uses the total amount you owe to determine 30 percent of your credit score. Having cards at or near the credit limit may harm your score, while low balances tend to increase scoring.
- Use caution when making large purchases unless you plan to pay off the entire balance before the interest-free offer expires. Avoid late payments, and ask the credit card issuer about balance transfer fees if you plan to shift debt from one card to another. Many credit card companies charge a fee based on a percentage of the amount transferred. If you do plan to use the interest-free card for transfers, verify that the new credit limit is high enough to transfer the desired amount.
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