0% APR Credit Cards

What’s the best way to utilize a 0% APR credit card? In order to truly take advantage of a 0% APR credit card offer, you must have a plan from the start. A 0% credit card isn’t simply an invitation to spend freely and worry about paying later, after all, as the 0% APR introductory period will end and the regular rate will kick in. Ideally, you should be getting a 0% card with a specific big-ticket purchase in mind or to pay for some unexpected expenses. That way you can use a credit card payoff calculator to determine the monthly payments required to pay down your balance before the conclusion of the 0% intro period.

If you don’t have a good reason to need a 0% APR credit card, then your motive in opening one comes into question. You shouldn’t need a 0% card to escape interest on everyday expenses because if you are truly living within your means, you should be able to pay for them in full every month. A spending adjustment is in order if you can’t, not a new credit card. Some people also use 0% credit cards in order to put the money they would have spent paying off their bills into savings accounts and thereby garner interest revenue. Doing so is fine, but be careful because it takes a tremendous amount of discipline not to overextend yourself using this strategy and you’ll be forgoing the ability to maximize your rewards (0% credit cards typically have low rewards structures, if any rewards at all).

Are 0% APR credit cards always on the market? No, people often assume that 0% credit cards are always around, but in reality they’re usually only limited-time offers. While more 0% credit card offers will be on the market during economic times characterized by growth and/or low interest rates, these offers are by no means permanent. Because of this confusion, consumers sometimes don’t plan to pay their balances in full by the end of the introductory period, thinking they can simply transfer whatever they owe to a 0% balance transfer credit card. Well, guess what…0% cards might not be available at that time, which is exactly what happened to a lot of people during the Great Recession.

Why do banks offer 0% APR credit cards? Banks offer 0% APR credit cards for three main reasons: to get the business of new customers, to encourage people to spend more than they would otherwise and thereby benefit from higher interchange fees, and to generate interest revenue off people who fail to pay down the entirety of their balances before the 0% period concludes and the regular APR starts.

When should you avoid a 0% APR credit card? Believe it or not, 0% APR credit cards aren’t for everyone. First of all, you shouldn’t use a 0% card if the lack of interest charges will cause you to spend more than you would ordinarily. Remember, you have to pay your balance in full at some point, and the interest rates you’ll incur after the 0% period concludes will quickly erase any prior savings. Second, if you pay your bill in full every month and plan to continue doing so, you would probably be better served getting the best rewards credit card possible. There’s really no point saving on interest if you won’t be paying any to begin with, and a 0% APR credit card with rewards isn’t likely to maximize your rewards potential.