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What to consider before opening a 0-interest credit card

If you have ever received an offer to open a no-interest credit card account, you may have asked yourself if there was a catch. Typically, these cards enable you to make purchases without having to pay interest on them for a predetermined amount of time (typically one year, 18 months or what have you), after which a regular interest rate kicks backs in.

In most cases, you would be wise to think twice before opening a 0-interest credit card, unless you are trying to make a large purchase and have absolutely no doubt in your own ability to pay it back. Why?

The 0-interest period is not permanent

Many people find themselves struggling with considerable credit card debt because they open no-interest credit cards thinking they will pay the balance in full by the end of the grace period, but they then find they cannot. Medical bills, school tuition payments and other expenses can get in the way, and before you know it, you have run up a hefty balance on that card despite your best intentions and your grace period is about to run out. Then, the interest kicks in, and you find yourself facing unmanageable monthly credit card bills and interest payments.

Opening more cards can hurt your credit

Your credit score depends on a number of factors, and one of those is your credit utilization score, which is essentially the number that represents what percentage of your available credit you are actually using. High credit utilization hurts your overall credit score. Ideally, you never want to utilize more than 30 percent of your available credit at a given time, and this holds true even if you are not actually paying interest on your purchases.

When it comes to no-interest credit card offers, keep this in mind: If something sounds too good to be true, it just might be. In other words, avoid buying into the hype and ask yourself the hard questions before signing on the dotted line.

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Joshua Z. Goldblum, Attorney at Law
826 Bustleton Pike Suite 101B
Feasterville, PA 19053

Phone: 215-322-2745
Fax: 215-953-9973
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