Comparing 0 APR Credit Card Options

Gregory J. Cook, EA, CPA+
Accredited Tax Advisor
Past President Alabama Society of Enrolled Agents
Past President Alabama Association of Accountants

Comparing 0 APR Credit Card Options

There are several different 0 APR credit cards on the market today. While the zero annual percentage rate may be enough to make you want to apply, you should know that not all of these products are the same. There are several factors that should be considered before you make your choice.

If rewards are important to you, choose a credit card that offers a solid reward system. Those that have never benefited from reward based products should take a closer look. There is no reason to not benefit from the spending that you already do. It is entirely possible to earn free flights, as well as other perks. If you only hold onto a credit card for emergency purposes, a reward system will not help you much. However, those that actively use their card can benefit greatly.

There are also 0 APR credit cards that offer cash back. Not all cash back offers are the same. Some offer a percentage on anything you purchase, while others require you to purchase items in specific categories in order to quality. Some cover both. There are also cash back offers in which the category changes from month to month. These can be quite confusing, but tend to be the most rewarding. If you want a card that offers a simple cash back system, choose one that rewards you for any type of spending.

Not all 0 APR credit cards stay at that level forever. It may be that the zero APR is only in effect for an introductory period. This is not a scam, and is actually quite common. You must remember that credit card companies are in business to make money. If they offered everyone a zero percent interest rate, they would never make a profit. What is most important is to find out exactly how long the introductory period lasts, and take advantage of this time to make the purchases you want to make.

It may also be possible to choose a card that offers zero APR on balance transfers. If you have an existing card with a high interest rate, you should look into transferring the balance. Far too many people overlook this option because they fear that making the change will be a hassle. In reality, it only requires filling in a few additional fields on your application to complete a balance transfer.

Take the time to examine each option carefully. Some products will be quite beneficial to you personally, while others may not. It would not hurt to take notes, and compare the numbers and benefits of each option on paper. Though some people are shying away from credit cards, they do remain an important part of our lives if used wisely.

Know what conditions are associated with 0 APR credit cards before you apply. It is fine to accept introductory periods so long as you seek the one that lasts the longest. Credit card companies want your business, and are willing to offer you plenty of perks in order to convert you into one of their loyal customers.

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Have You Refinanced Your Home?
If you are one of thousands who locked into a lower home mortgage interest rate, then you've hit the savings jackpot! Besides getting one of the lowest rates in decades, you may be able to deduct some of the refinancing costs when you file your tax return. The “points” paid to get a home mortgage may be deductible as mortgage interest when you itemize on Form 1040's Schedule A. Points paid to get an original home mortgage may be fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, you figure the interest deduction by dividing the points paid by the number of payments you will make over the life of the loan. You may deduct points only for those payments made in the tax year. Say you paid $2,000 in points and you will make 360 payments on a 30-year mortgage. You could deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year. If you used part of the refinanced mortgage money to finance improvements to your home and if you meet certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid.

Also, if you are refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off. Other closing costs – such as appraisal fees and other non-interest fees – generally are not deductible. And the amount of your adjusted gross income could affect the amount of deductions you can take. Any way you look at it, between the lower interest rates and the tax savings, that's money you can take to the bank. For more information on deductions related to refinancing, contact your Cook and Co. Advisor.