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How to better manage your credit

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Managing your credit is an important factor of your overall financial health. There are a variety of ways to manage credit and debt, and you should be conscious that the decisions you make have a variety of impacts, as well. One choice you have available is using a credit card with a 0% APR, or annual percentage rate. A 0% APR credit card has distinct advantages that can help you reduce debt or be a stop gap in cases of emergency.

The way a 0% APR credit card works is usually through an introductory offer. There is no credit card available with 0% interest that lasts indefinitely. There will always be a time limit on how long that attractive offer remains in place. A typical time frame is 18 months. During that time frame, you will have no interest accrued on purchases and sometimes balance transfers. This means you could use a 0% APR card to purchase large items like appliances or pay for emergencies like car repair and have all your payments apply to the actual purchase instead of being split between the debt and interest on the “loan” of credit.

Once the introductory period ends, however, you will return to the normal process of a credit card with interest applied to your overall balance – in other words, the amount of money you are loaned on credit is increased by the interest percentage on that amount added in. So if you buy a washing machine for $800 and your interest rate on the credit card is 10%, you would actually have to pay back $880 for that purchase. Of each payment you make on that balance, some of your payment goes toward the actual debt of the purchase and some goes to pay the interest that is calculated and added onto the purchase price. In this way, it costs more to buy the washer with credit and will take you longer to pay for it due to interest. Keep in mind, however, that the interest continually gets applied the longer it takes you to pay for the purchase. In this way, you would end up paying even more than $80 worth of interest on the initial purchase amount.

If you were able to make the purchase with a 0% APR credit card and make all the payments for that purchase within the introductory time frame, however, you would be able to pay just for the purchase and not pay for additional interest. This is the main advantage of these kinds of credit cards. Likewise, if the card you choose allows balance transfers, you could move the balance of a high-interest credit card to the 0% interest card and the same concept applies. You would be able to apply 100% of all your payments on the new card to the actual amount of money owed without having any wasted on additional accrued interest. You need to read the fine print carefully on cards you consider to determine what additional fees might be required on balance transfers.

Find out more about the different 0% APR credit cards that are available by researching 0aprcredit.cards online, and determine which one will help you reach your financial goals. You can also find more information regarding low interest credit cards here https://www.nerdwallet.com/blog/top-credit-cards/nerdwallets-best-low-interest-credit-cards/.
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