Monday, February 27, 2006

A trap in 0% Apr offer: expiration date

There are a lot of credit cards that offer 0 Apr nowadays. People are making money by taking advantage that to pay off their debts or save it to the high-yield online saving account. Yet, there are still a lot of complaining about getting high financial charges finally even if they pay the minimum of every statement on time. Here I want to talk about one of the traps in those attractive b/t offers: expiration date of the offer. I will also discuss some tips about how to avoid getting into that trap.

When you get the preapproval letter or read the advertisement from various resources, you can always see something like that " 0% Apr on B/T UP TO 6/1/07". Please be aware that it is "UP TO". You need to read the details about the conditions of up to. Normally, in order to extend your 0% Apr to another 3 months, you are required to make some purchase first and not returned with a certain period. If you didn't make purchase or you did but paid it off immediately,your real expiration date became 3/1/07.
tip 1: Always read the conditions of the bonus period.

When you get the real card sent by credit card companies, you will get a new term about the rate and period of the 0% Apr offer. Don't take the offer on your preapproval letter or the advertisement for granted.
tip 2: Look at the terms & conditions along with your new card.

There are many different ways to describe the expiration date of the B/T offer. The most simple one is what has been mentioned above. 0% Apr until 3/1/07, which means you just need to pay off your balance before the specific date. You may also see "offer expires on the first day of the statement period including 3/1/07". You need figure out what is the first day of your statement period normally and prearrange the payoff activity before that period including 3/1/07. It should be a certain day of February or January 2007.
tip 3: Try to understand the description of the expiration date.

The most important thing is don't wait till the last day to pay off your balance. Give yourself at least five days to arrange that in case anything unexpected happens.
tip 4: Set a bill reminder in your bill management software. Basically I will set a $1 bill in the last day of the month prior to the expiration date and then adjust it to the real balance and the real planning payoff date when I check my monthly networth at the end of that month.


At 8:15 PM, Anonymous wesleman said...

Don't forget the infamous "Two-Cycle Balance" trap used by some credit card companies! The ones known to me are Discover and Chase/BankOne.


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