5 Questions to Ask About Zero-Percent Card Offers

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They're called "zero-percent promotional balance transfers," and they can save you money – or they can drive you deeper into debt. Here's the story.

I review dozens of credit card offers each week to find the best deals. My goal is to help you use credit cards to build and protect your money and credit. Check out more on our credit card page.

When you’re mired in credit card debt, it’s tough to make a dent in your balance when you’re paying double-digit interest rates each month. And if you’re still clinging to a good credit rating, you’ll  be tempted by the zero-percent balance transfer offers that are flooding your mailbox.

While zero is always a great interest rate, there has to be a catch, right? In fact, there are several. Before you sign up for a promotional balance transfer offer, ask yourself these questions…

1. What’s the balance transfer fee?

In almost every case, a credit card issuer makes you pay a balance transfer fee before you can take advantage of their zero-percent promotional financing – and they say as much in their terms, if you read them closely enough.

A report this month by Smart Balance Transfers notes, “Average zero-percent credit card balance transfer fees increased in March from a multi-year low of 2.95 percent back above the 3 percent mark.” That’s just the average – some cards are now charging as much as 4 or 5 percent.

I could find only one card bucking this trend: the Slate card from Chase, which is the last of the two remaining zero-percent balance transfer offers with no fee. (The Discover card, mentioned in that post from last month, is now charging 3 percent.) So if you are looking at an offer that requires a fee greater than 3 percent, realize you can probably get a better deal.


2. What’s the length of the zero-percent financing offer?

The next-most important aspect of the balance transfer promotion is: How long can you enjoy the zero-percent interest rate? Fortunately, the average length of zero-percent balance transfers has been rising. According to Smart Balance Transfers, these offers now average 12 months. So if a card has less than a year of zero-percent promotional financing, you should look elsewhere.

3. How long do you have to make a qualifying transfer?

Like the balance transfer fee itself, the eligible period for making zero-balance transfers is hidden in the fine print of the terms and conditions. Some cards (like Slate from Chase) only allow you to make transfers within 30 days of opening an account. Others (like More from Discover) let you do so throughout the life of the zero-percent promotion. Don’t forget to check on this.

4. Is the zero-percent on just balance transfers, or are new purchases included?

This is a critical detail that must be understood before you apply for any offer. Some zero-percent promotional financing offers apply just to balance transfers, just to new purchases, or both. Having zero-percent financing on new purchases can save you a lot of money – but not if it’s an incentive to incur even more debt when you should be paying off your balance.

5. What is the standard APR?

Sure, you can enjoy a zero-percent balance transfer offer for quite a while, depending on the card you get. But the good times will eventually end. When the promotional financing expires, how high will your interest rate be? Unfortunately, it’s not likely to be one of the lowest interest rate cards on the market. At the very least, thinking about that higher interest rate should motivate you to pay off your entire balance before your zero-percent rate expires. Otherwise, your only alternative will be yet another balance transfer – and you’ll likely be paying another expensive balance transfer fee.

Stacy Johnson

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