Ask Stacy: Should I Jump on a Zero Percent Credit Card Offer?

Everyone wants a zero percent credit card, but what’s the catch? Here are some things to know about potential flies in the ointment.

If you live in America, have a decent credit score and can fog a mirror, you’ve probably received promotional offers for very low or zero percent credit cards.

A zero percent credit line for a year or more can be mighty tempting, especially if you’re laboring under the burden of high-interest debt elsewhere. Which brings us to today’s reader question.

I would really appreciate some advice about whether it is a good idea for me to take advantage of the zero percent balance transfer promotion with one of my credit cards.

I recently came into some unexpected expenses and thought that maybe this might be an opportunity to limit the high interest I am currently experiencing with my credit card, which has more than $8,000 on it and an interest rate of 15.24 percent.

Sincerely — Struck by offer but don’t want to make it a financial mistake

The short answer to your question, Struck, is yes. If you can pay zero interest on all or part of an existing balance, you want to.

That being said, there are things you need to know about credit cards, especially the zero percent interest kind.

Here are some things to know about zero percent balance transfer offers.

It’s possible you won’t get it

Zero percent card offers are normally made to those with good credit — scores of 700-plus. While card companies typically screen before making offers, if your credit score changes before you submit an application, they could turn you down.

Offers made by credit card companies are just that — offers. They aren’t guarantees.

Mess up once, and you could lose the zero percent rate

Be sure to read the fine print. Many cards will include conditions, such as paying on time, to retain the zero percent rate. Make a payment that’s one day late, and you could lose it.

You’ll probably pay a fee

This is the biggest drawback to transferring a balance to a zero percent card. The vast majority of issuers charge a fee ranging from 2 to 5 percent of the balance to transfer to their zero percent card.

For example, if you transfer $8,000 to a card that charges a 4 percent fee, you’ll be paying off $8,320.

Do the math

That’s why, before transferring any balance, you have to figure out how much it’s going to cost you. There are calculators that can help determine just how much you’ll save by transferring balances. For example, has one here.

I used that calculator to find out what you’d save by transferring an $8,000 balance to a zero percent card for 18 months, after paying a 4 percent fee. It says you’ll save $1,509 in interest over the life of the 18-month promotional period, then $22 a month thereafter, assuming that you make only minimum payments. Not bad.

Granted, you may not be able to transfer the entire $8,000 balance, and we don’t know the transfer fee you’ll pay. So, although the math will probably work out to your benefit, you need to do it yourself.

Check the rate for purchases as well as transfers

Some cards offer a zero percent rate on balance transfers but charge a different rate on new purchases made on the card, as well as for cash advances. If the amount you’re transferring will devour your entire available credit line, this won’t be a concern, but if not, find out the terms.

Have you shopped it?

Since applying for credit is a hassle, when you do it, make sure you’re getting the best bang for the buck.

Like many consumer sites, we have a full list of balance transfer credit cards. Some have longer zero percent interest promotional periods than others, and some have lower post-promotional rates, better rewards, lower fees, etc.

You obviously want a zero percent promotional rate, but decide on other features you’d like, then take the time to make sure you’re getting the best deal.

Are you using a Band-Aid when you need stitches?

There’s an elephant in the room with any balance transfer, namely, the reason you’re juggling debt in the first place.

As justification for carrying a balance, Struck says, “I recently came into some unexpected expenses.” One-time, nonrecurring expenses are the perfect problem to solve with zero percent credit offers. But if you’re habitually living beyond your means, a zero percent card is simply postponing the inevitable day when you reach the end of your credit rope.

Obviously, whatever the source of your debt, paying less interest is better than paying more. But as you make these transfers, take some time to evaluate what got you here and what it’s going to take to get you out. Then, if you need help, get it.

Got a question you’d like answered?

A great way to get answers to just about any money-related question is to head to our Forums. It’s the place where you can speak your mind, explore topics in-depth and, most important, post questions and get answers. It’s also where I often look for questions to answer in this weekly column. You can also ask questions by replying to our daily emails. If you’re not getting them, fix that right now by subscribing here.

About me

I founded Money Talks News in 1991. I’ve earned a CPA (currently inactive), and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. Got some time to kill? You can learn more about me here.

Stacy Johnson

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  • Andrealk

    I’ve noticed that I never get 0% transfer offers from the credit cards that I pay in full every month, only from the ones I carry a balance on. I tried a little experiment and let a balance build up on a card I had usually paid in full…sure enough, within a couple months, I received a 0%balance transfer offer. I think the credit card companies only make these offers on cards that you already have a balance on, because they hope you’ll only make the minimum payments going forward, which means the interest will continue to accrue on the existing balance…and eventually start to accrue on the transferred balance once the promotional period expires. The best thing to do is to first pay off the existing balance if you can, AND THEN accept the 0% transfer offer…then you really have their money for free for the entire promotional period, except, of course, for the up front transfer fee.

    • I.Popoff

      In my experience, 0% offers come in the mail from companies I don’t currently do business with. These companies use what is called pre-screening to target you with their offer. Insurance companies also do this. You can opt out of receiving this kind of mail permanently or for five years when you get your annual credit report.

    • Jcatz4

      I occasionally get 0% offers and I have always paid off my credit card balances in full each month for 27 years.

  • bigpinch

    Another thing to watch out for, something I ran into the first time I tried to use a 0% balance transfer, is that you have a zero balance on the card before you transfer the large expense to the card. If you have even a small amount remaining on the card, you’ll end up paying the usual rate on the entire balance until the small amount is satisfied. When you make a payment, the credit card company will apply the payment to the larger of the two debts to keep the greater interest rate alive for as long as possible; which means you may never get the 0% you were expecting.

    • That happened to me. I signed up for a balance transfer for a 0 percent interest. However, the purchases were not 0 percent, so I didn’t even think of not using it for purchases. Well, when the bill came, the payment I made went toward the higher balance, which left the purchase balance untouched, so I ended up paying interest on the purchases. I was so mad. I hate paying interest, so I ended up paying off the entire balance anyway.

  • N. Gabel

    I’ve used these types of promos before. What I do to make sure I don’t get saddled with debt is take the amount I put on the card and then divide it by the number of 0% months of the promo and then put the resulting figure as my minimum monthly payment on auto pay so I don’t forget. That way I get the best deal. Also, if I can, I’ll pay a little extra each month to speed up the process or drop 1 month off the number of 0% months (say 11 instead of 12) and that way the cc company doesn’t try to pull a fast one on me due to some small print I may have missed. Debt is like a diet, you have to keep at it until you reach your goal . Best of luck to all of you debt crushers !!

  • speaksthetruth

    I just did this to my Chase Slate card. I have great credit 820 and the Slate offeres 24 months 0% and 0 dollars in transfer fee. We went on vacation last christmas and thought of transferring the cost of vacation to the Slate card. It gives us 24 months to pay it off and didn’t charge us to transfer from one card to the next. How much better can it get?

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