That credit card with 0% APR for 12 months sounds pretty good, doesn’t it? Should you go for it? The only way to know for sure is for you to follow the links through to the Terms, Conditions and Fees and read the fine print carefully. And while that’s easy advice to give, following it can be tricky, especially when those terms and conditions seem to be written in a foreign language. If you don’t, though, you could find yourself paying 29% interest on that 0% APR credit card.
To help you get used to reading through the credit cardese, we’ve taken statements from various credit card terms and conditions information and explained them in every day English.
Level 1 and Level 2: a A 0% fixed APR for the first 12 billing cycles following the opening of your account. After that, 11.99 % variable b for Level 1 Pricing, or 15.99 % variable for Level 2 Pricing. Standard Pricing: From account opening, 20.99 % variable.
You’re applying for a card with an introductory APR of 0% for 12 months. What’s all this about Level 1 and Level 2 pricing? And standard pricing? Let’s take a look at the footnote next to Level 2 to see what it says:
You agree that we will consider your response for a Level 1 Pricing account and that we reserve the right, based upon our evaluation of information furnished by you or others, to open a Level 2 Pricing account or a Standard Pricing account, or not to open any account.
Read that through carefully, and what it says is that ‘if you don’t qualify for our best interest rate (11.99% for Level 1), you agree that we may open a Level 2 account at 15.99% APR or a standard account at 20.99% APR. If we open a standard account for you, your interest rate will be 20.99% from the beginning. 0% financing is reserved for Level 1 and Level 2 accounts.
In other words, if your credit isn’t top-notch, you may end up with a credit card that charges almost 21% interest on purchases. If you apply for this card with the intent of taking advantage of 0% interest for 12 months in order to pay off other credit cards, and don’t qualify for Level 1 or Level 2 pricing, you could end up paying a HIGHER rate of interest on those balances from day one.
The point of this article is not to discourage you from applying for a credit card. If you have good credit, and are carrying balances on other credit cards with interest rates higher than the 11.99% APR you’ll have after the introductory rate, it’s very likely an excellent move for you to transfer those balances. You’ll pay 3% of the balances (which is also in the terms and conditions) to give yourself 12 months without any interest on those balances.
