lowestcostcreditcard.com

A lot of credit cards have 0% offers. These can be great for taking advantage of introductory offers and avoiding paying interest. However, there is a catch!

You will find that most credit cards have a 0% on purchased AND a 0% on balance transfer rate. The balance transfer rate is generally longer than the purchases rate.

So what?

This is the catch. When you pay off some of your balance on the card the credit card company pays it onto the lowest interest part of your balance, in this case the 0% balance you transferred. This means that the item you bought during the introductory 0% on purchases period is still accruing interest, and will continue to until all the balance transfer is paid off.

How to avoid this?

There are two ways to avoid this trap. First is to get a card where the 0% on balance transfer time limit is the same as the 0% on purchased time limit. This is vary rare.

The second method of avoiding this trap is actually straight forward. If you need to transfer a balance AND you want to avoid interest on purchases, get two cards. Transfer the balance onto the first card, then cut it up! Never use it again and simply use it to chip away at. Use the 0% on purchases card to purchase what you need.