A zero interest credit card is a source of short term interest avoidance. Lenders offer a promotional rate for a defined period of time in order to attract new, high value customers from other financial institutions. The lender benefits from attracting customers who are far less likely to default on their credit agreement and the borrower enjoys a zero percent balance transfer.

Zero Interest Credit Card Transfer Fees

A low rate balance transfer is not be a free transaction. The new lender normally charges a transfer fee of approximately 4% to cover their administrative expenses. However, this fee has started to creep-up in recent months. It is necessary to factor in this charge when determining how much is saved with an interest free balance transfer credit card. The fee will be added to the new balance so the amount owed will increase in the short term. The 0% balance transfer is initiated by the new provider and typically takes 30 days to complete.