You owe interest on a credit card at 0% APR. How did it happen?

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As rising inflation and soaring gas prices continue to impact our wallets and lives, many of us are looking for ways to save. One way people have been able to get the most out of their money is by using a 0% introductory APR credit card.

With responsible use, 0% intro APR credit cards can help you save money strategically on future purchases or past debts, but only if you are able to avoid interest charges. .

If you recently opened a credit card with an introductory APR of 0%, but were surprised to find that you now owe interest on your balances, there are a number of reasons why this could have been. occur.

What is a 0% APR card?

Credit cards that offer a 0% upfront APR allow you to carry a balance month-to-month, interest-free, for a limited time, typically 15 months or more. And since current credit card interest rates are just over 16%, it could save you hundreds of dollars a year or more, as long as you stick to the rules set out in your credit card agreement.

Why you might owe interest on a 0% APR credit card

If you apply for and start using a 0% APR credit card without paying attention to the offer and details, you could end up with more than you bargained for. Here are five common reasons why you might now owe interest on a 0% APR credit card.

0% offer only applies to certain transactions

You may have noticed that the 0% APR intro offers can relate to purchases and balance transfers. But it’s not always the case. For example, American Express credit cards only offer intro APR offers on purchases, and the Citi® Double Cash Card only has an interest-free period for balance transfers.

Transactions that do not qualify for the 0% offer will not qualify for the interest-free introductory period. Make purchases with a credit card that only has an introductory offer for balance transfers, and those purchases will start earning interest at the standard rate. The same goes for transferring debt to a credit card that only has an introductory offer on purchases.

The introductory offer has expired

Losing track of when your promotional period is over or thinking you have more time to pay for your purchases or balance transfers is another reason you could end up paying interest on a 0% credit card. introduction APR.

After the promotional period ends, the continuous variable APR will apply to any remaining balance and all new purchases.

The amount of time you have to make interest-free payments varies. If you’re lucky enough to have a card with a long introductory period, you could find yourself making interest-free payments for up to 20 months. But some cards have much shorter introductory periods, perhaps even as little as six months before the standard variable rate kicks in.

A late payment canceled the APR period

When you open a new credit card, you’ll receive a monthly statement at the end of your billing cycle. This contains a lot of information, including the charges you made for the previous month as well as any interest or charges you owe.

It will also have the minimum payment you must make on the due date each month, even if you are taking advantage of a 0% APR introductory offer. Failure to pay this amount will be considered late payment, which may void the terms of your introductory offer.

If you thought you didn’t have to make monthly payments during your promotional period, you’re not alone. But if so, like many other people, you probably woke up suddenly when you saw your next account statement.

You missed a deadline

A balance transfer helps you save a lot of money, especially if you transfer your debt from a high-interest credit card to a card with a 0% APR introductory offer. But depending on the credit card, you may have a limited amount of time to complete the balance transfer.

Some credit cards only give you 60 days from account opening to complete your balance transfers. If you wait too long and fail to transfer your debt to the card before the 60-day deadline, you end up paying standard rates and fees.

You are not eligible for the 0% intro APR offer

It is possible to qualify for a credit card but not for the promotional offer. This can happen when you respond to a credit card offer you received in the mail. People sometimes assume it’s the same as the offer they see online, but that might not be the case.

Depending on your creditworthiness, a card issuer may send you a personalized offer different from the general offer found online. If you have good credit, this may work in your favor and you may receive a higher sign-up bonus or lower interest rate than advertised. But if you don’t have great credit, you may lose some features such as the 0% introductory offer.

If you assumed your new credit card came with a promotional offer and you didn’t read your credit card agreement, you will most likely end up paying interest on your credit card balance.

What to do if you owe interest on a 0% APR card

If you’re paying interest on a 0% introductory APR card, the first step is to find out why. You can start by checking your credit card statement as well as your cardholder agreement to make sure you’ve followed the terms and conditions. You can also contact your card issuer and ask.

Once you’ve verified that the interest charges are legitimate, it’s a good idea to understand how to pay off credit card debt. It can be as simple as opening a new 0% APR card and transferring the balance. Then use a credit card repayment calculator and create a debt repayment plan to help eliminate your debt.

But it may not work for everyone. If you already have a lot of debt, you might not qualify for a new credit card. If so, you may need more help than a calculator and a budget can provide. Here are some strategies that might be available to you:

The bottom line

Credit cards with 0% introductory APR offers can be an effective tool to avoid wasting hundreds of dollars in interest charges and help you better manage your personal finances. If you recently opened one, only to find that you still have to pay interest charges, it can be disappointing. But knowing why it happened is the first step to making sure it doesn’t happen again.

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