Beware 0% APR Credit Cards

NEW YORK (MainStreet) —Heard about that guy who never paid for a single meal all his life? Well, you wouldn’t have, because I just made that up. There really is no such thing as a free lunch. And over the years, thanks to the constant flood of sales enticements that come accompanied with really small and fine print, I’ve come to distrust the word free.

So when 25-year-old Mike Camp told me he was getting offers for 0% APR credit cards, I couldn't hide my skepticism. “I’ve been using a secured credit card for over a year now, and I’ve been pretty responsible with it," he said. "Now I am constantly flooded with offers for regular credit cards with 0% APR." Camp has been a paying a $36 annual fee on his secured card in addition to having his $ 2,000 deposit locked in. So these offers do look tempting.

Also see: How Paying Just the Minimum on Your Credit Card is a Trap

How 0% APR works

0% APR cards offer you an interest-free period on your credit card for a limited amount of time, usually for an introductory period of 12 or 15 months. During this period, typically you will not be charged interest on your purchases or balance transfers if you make the minimum payment each month. At the end of this period, the APR will go up to market rates.

Who usually benefits?

Credit cards with 0% introductory offers can often make sense to someone who either carries higher rate balances on another card or who might need a new card and doesn’t plan to pay the balances in full each month.

The most attractive prospects for regular credit cards that more often than not include intro rate offers are people who have been using a secured card responsibly for a year or more. And that’s probably how Camp got onto the mailing list.