When we think about credits, loans, credit cards, and other types of financial products, we think right away about the interest rates that accompany them. Interest, after all, is what they’re for on the part of the financial institutions that provide such products. They really would not lend money if there’s nothing in it for them. It is through interest charges that financial institutions earn – their money earning money for them. But, have you ever heard about zero interest loans? Sounds great, right? And yes, there are actually some credit card companies that offer this under given circumstances.
There are a number of reasons why a credit card company provides zero interest loans to their clients. In our economy today, financial institutions understand that most consumers are under substantial credit card debt. These consumers look for ways to consolidate their existing debt into a much lower interest rate. One of the easiest ways therefore for lenders to gain more clients is to lure these consumers to do balance transfers with them and provide them a much lower interest rate and yes, up to zero percent interest rates. While zero interest financing exists, this rate is often offered only as introductory. But it still is not a bad deal when you come to think of it. This is why most conventional credit card companies and other merchants offer a zero percent introductory offer to new credit card accounts. Different lending companies have different durations for their offer. There are some that provide their zero percent interest rates for 6 months while others give them out for up to a year after the credit card is issued.
After the introductory period as the zero percent interest rate expires, one of two things may happen. The first thing that may happen is that the credit card company considers the introductory period a clean slate. This means that the incoming interest rate starts from the moment the balance becomes subject to it after as the zero percent interest expires. The second scenario is that there are some credit card companies that accumulate the interest charges during the time period that credit card is under zero percent interest rate. As the rate expires, all the accumulated interest is added to the balance on the card. Consumers need to be careful with this second scenario because it will be as if the interest rate has been charged all along but does not become due until the rate is actually adjusted after the promo period. In most cases, this is easily fixed and avoided by paying the balance off in full before the date of adjustment.
Experts advise consumers to practice self constraint and discipline with their finances. Zero percent interest may mean that you won’t have to pay for using the credit card, but using your credit card still is an expense. Be sure that all payments are made on time and never go beyond your credit limit while the credit card is still on the zero percent introductory rate. It can be that any simple deviation from the agreement of the credit card may lead to the zero percent rate to be cancelled and replaced with a higher interest rate. Be sure that you always follow the agreement.
Sometimes dealing with your bad credit can be a hassle. If you need money, but have bad credit you are often forced to consider a bad credit loan. Companies like BHM financial specialize in bad credit loans.