Beware of the Potential Pitfalls of Credit Cards

Are you savvy when it comes to acquiring a 0% credit card? I mean really savvy? 

So many credit card users are seeking out zero percent credit card deals every day as a method to improve their finances and reduce their debts. The problem is that many do not realise the potential pitfalls involved when on the lookout for a perfect zero percent deal.

Even with the transfer fees amounting to a tidy sum in some cases, zero percent credit card promotions attract a high number of consumers every year. 

Countless people become victims after falling foul of the stringent rules that credit card providers keep hidden in their terms and conditions – otherwise known as the “small print”. So few people actually bother to read the small print, typically because it is normally smaller and the ink is lighter!

This can be a fatal mistake as far as your money is concerned and could end up costing you severely in the long term. It is imperative that you read through the “small print” thoroughly with a fine tooth comb (using a magnifying glass if necessary!) to avoid joining the vast number of credit card consumers that have had their promotional zero rate cancelled with immediate effect due to not availing themselves of the rules in the “small print”.

This can be devastating for those credit card holders, as their zero percent promotional rate is cancelled immediately and they will find themselves paying the credit card providers full rate of interest. Some of these rates can be exceptionally high leaving the credit card holder in severe financial disarray.

The competition between credit card providers is still ever present to draw in new credit card customers. However, the deals can have dire consequences for the unsuspecting consumer if they are not savvy enough!

Due to their failure to read the terms and conditions thoroughly, many credit card holders break the rules – albeit it innocently on their part, but none the less they find them-selves penalised and subsequently losing their zero percent rate deal in a flash. There are a few credit card providers that are the exception to the rule and will allow one innocent mistake before penalising by withdrawing the zero percent rate deal, but these really are the exception rather than the rule.

When this happens, many credit card holders are thrown into financial chaos that could well have been avoided – had they taken the time to read the “small print”. 

Many credit card providers will change their criteria for the “minimum monthly repayment” and if customers don’t check that they are meeting this requirement they will lose their promotional rate. Many credit card customers set up a direct debit to meet their minimum payment commitment and then forget about it.

An innocent mistake in not checking that you are making the minimum repayment will in the majority of cases create financial hardship. The only way out of this situation is to look around for a new zero percent credit card, but the pitfall here is yet again there will be another hefty balance transfer fee.

It is thought that a high percentage of credit card consumers are not aware that they are obliged to pay the minimum repayment each month - which is on average 2 or 3 percent each month.

Indeed, some consumers are naively under the impression that the “interest free” period means that they need to pay nothing at all for that period of time.

Another very significant fact to be aware of with a zero percent credit card is if you choose to spend on it, many credit card providers do not offer zero percent on new purchases. Therefore, all new purchases will attract interest charged at a higher rate.

Moreover, the majority of credit card providers will also require customers to pay off the cheapest debt first – meaning that their transferred balance has to be paid before new spending can be paid off.

The upshot is – Read through the terms and conditions meticulously before you enter into any zero percent credit card deal so that you are in no doubt as to whether or not a particular credit card is the most suitable for you and not the credit card provider.