Experts worry consumers are taking on debts they cannot afford to pay back.
Experts have labelled the “surge in credit cards offering interest-free promotions a ‘ticking time bomb”as lenders are betting on the fact that borrowers won’t repay their debts before standard interest kicks in, and they begin to make a profit. That is the first reason!
Secondly, credit cards with long 0% deals attached can tempt people into taking on debts that pile up and cause them difficulties later. It draws people in with tempting terms of up to 30 months on purchase cards and 43 months for balance transfers.
PLEASE NOTE (thirdly): “Lenders do not offer these deals for your benefit. They are banking on the fact that you will fall foul of the small print and end up paying interest on the whole lot or that you will forget to pay it off in time.
Number four: Card providers rarely inform borrowers when these 0% deals are due to end and if they haven’t paid off their balance. Anything left on the card will begin to clock up interest of around 18%, resulting in eye-watering bills.
Fifth, balance transfer credit cards, which offer similar interest free terms, allowing consumers to shift existing debts to them for a small fee, can also lead borrowers into the same trap. With promotional offers lasting as long as 43 months, it is easy for borrowers to lose track of when they need to clear their debts.” Mail-Finance.
Sixth and as stated before, borrowers can easily get into a hot mess if they spend more than their limit or miss repayment which forfeits the 0% term too.
5 TRICKS TO AVOID THE 0% INTEREST TRAP
- Be disciplined about your borrowed $$.
- Calculate your monthly payment, keeping the deadline of repayment in mind..
- Avoid late or missed payment fees.
- Remove the card from your wallet to curb the temptation of overspending.
- Set up recurring payment from your bank account to ensure #3 is done.