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What's better: zero percent APR for one year, or 6 percent for 3 years?

By , CardRatings contributor
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If you're using credit cards strategically, as part of a comprehensive personal finance plan, your ultimate APR shouldn't make any difference. Even with median "go-to" rates around 15 percent, you'll save the most money with a zero percent credit card -- if you qualify for one.

Here's where our credit card calculators can really help you find the best possible deal. Let's say you've got $10,000 in debt. The Pew Safe Credit Cards Project estimates that the median credit card APR for excellent credit hovers at around 12.99 percent. If you already have a card that cheap, you can clear your debt in three years by paying $337 per month. Under this hypothetical scenario you'll end up spending $2,127 in interest along the way, but imagine what you'll do with an extra $337 in your budget once you've made your last payment.

Depending on your credit score, you could qualify for a low introductory rate that lasts between 6 and 21 months. However, many teaser rates end up in "go-to" interest rates in the double digits. A typical zero-percent APR deal for 12 months will let you clear a hypothetical $10K debt in three years with a $350 payment, costing just $875 in finance charges. Miss a single payment during your first year, though, and you'll trigger a penalty interest rate that can sink your chances of hitting that goal.

Keep in mind, however, that banks will only extend you their best balance transfer offers if you're a brand new customer. With consolidation pulling more brands under the same corporate parents, you might be surprised to hear rejections from lenders you don't remember having accounts with in the past.

Therefore, you may have to seek a balance transfer from a smaller bank that's hungry to win your business. Simmons First and IberiaBank both offer Visa credit cards with variable rates as low as 7.25 percent. Qualify for one of those cards, and in this hypothetical example you'll spend about $1,150 in interest over three years, with just a $310 monthly payment. Pentagon Federal Credit Union offers a balance transfer deal as low as 7.5 percent over 36 months, rewarding you for taking a focused approach to paying off your credit card debt.

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