Hello, I recently received a credit card which says that all purchases
and balance transfers will carry 0% APR until Jan 2004, as long as at
least the minimum payment is done every month.
Being rather naive, and since this is my first such credit card (I had
a student card before with USD 500 credit limit) I assumed that it
means I can purchase stuff upto the credit limit and pay it off in
regular instalments until Jan 2004, always making sure that I pay at
least the minimum amount every month. Is this reasoning correct?, I
really don't want to end up paying interest, and I thought this card
would enable to buy a laptop for effectively 0% interest. A
comprehensive answer would include a direct answer to this, and links
to some informative websites, about APR and credit card policies etc.
Thanks

Greetings uwimg-ga!

It sounds like you have a good understanding of the 0% APR offer that
your credit card has offered you.  With the current low federal
interest rates and the general competitiveness between credit card
companies, many cards are currently offering very low intro/promo
APRs.

As you stated, most offers contain various stipulations:
-if you have a late monthly payment, the intro APR will end and the
APR will adjust to your "regular" APR.
-the end of the promo period is just that - the end of the promo. 
After that the APR goes back to the "regular" amount you agreed to.

Although you may be a responsible consumer/payer, there are many
people who will miss a payment.  So the next thing they know they have
a 15% APR (or some other %) on the unpaid balance.  The credit card
company will obviously make money from them since those consumers will
incur finance charges.

The credit card companies also are betting that a number of people
will not pay off the entire amount by the end of the intro period.  
People get used to paying off just the minimum amount and then one day
they wake up and find that the intro period is over, that the regular
APR is now in effect, and that they still have a rather large unpaid
balance.

Also, balance transfers usually carry a transaction fee, often the
greater of 3% of the transfer amount or $50.  This fee may or may not
be eligible for the promo APR rate.

The credit card company is also hoping that you'll stick around after
the promo rate is over.  They hope you'll get used to the using that
card and will continue to use it even though the regular APR may be
higher than other credit cards you can get.

You may want to contacted the Customer Support number for your credit
card if you have specific questions about what they are offering. 
Sometimes, for example, they will waive the transaction fee on balance
transfers.  Or they can tell you the exact day that your promo APR
will end.

To read more about 0% APR offers...

"Zero-percent card deals go long":
http://www.bankrate.com/brm/news/cc/20030207a1.asp?prodtype=cc

"Take care with your zero-percent credit card":
http://www.bankrate.com/brm/news/cc/20020430a.asp

"20 sneaky credit card tricks":
http://www.bankrate.com/brm/news/cc/20021106a.asp

The above site has many interesting and helpful credit card info:
http://www.bankrate.com/brm/rate/cc_home.asp

And for a good general link...
"National Foundation for Credit Counseling's DebtAdvice site:"
http://www.debtadvice.org/

I hope this information is helpful.  If you would like for me to
clarify any part of my answer or further research your question,
please let me know before issuing a rating.  Thanks!  And have fun
with your new laptop.


leep-ga


some search strategies used:
credit card help responsibilities tips

---

Clarification of Answer by leep-ga on 17 May 2003 00:55 PDT

To add a little to what apteryx-ga placed in the Comments section
below, you can also use a credit card review site such as
CardOffers.com to see if there are any reviews/comments about your
specific card company:
http://www.cardoffers.com/

Good answer, with some great bit of background information. Would have
also appreciated some more neutral links about APR etc. But still very
acceptable. Thanks.

But, uwimg, please be very cautious and do some checking before you
sign up.  This could be a real asset and convenience for you, or it
could turn into a nightmare.

Some credit card companies are more straight-dealing than others.  You
might want to do a little web research on the particular one you are
interested in (especially if its return address happens to be in
Wilmington, DE) and look for customer stories and complaints.  Some of
the companies ding you very hard if you are late by even a day, and it
seems that somehow even when you mail on time some of your payments
start "arriving" later or just being posted later, and how can you
prove they weren't actually late?  Next thing you know, you are
building up huge late fees and getting further behind all the
time--and if you try to call up and straighten it out, you could spend
45 minutes or more on hold and never reach someone who will actually
help.  Promises made on the phone don't necessarily resolve into
expected adjustments on your bill, and all the time you are also
paying interest compounded daily on all balances.

One mistake like this, uwimg, and I think you would probably swear
never to let it happen to you again, and you might also find yourself
wanting to warn other trusting innocents about the down side of some
credit-granting institutions.

Apteryx

hello apteryx,

My apologies for the rather late response. I appreciate your concern
and you are right about this bank from Wilmington,DE. I've taken your
words to heart and decided on paying off all my balances online 10
days before the due date. This is only my second credit card, and I'm
just using this to buy a couple of things that I need, but would like
to pay them off well within Jan 2004.

Thanks again for your time and help,
uwimg