If you need to borrow money to make a big purchase – say, a new appliance or a sofa — but want to repay the loan over time, you have several options at your disposal. You could apply for a personal loan with a fixed interest rate, a fixed monthly payment, and a predictable repayment schedule, for example. You could also borrow money from family and friends, or give yourself a loan from your emergency fund, provided you have one.
Last but not least, you could of course use a credit card for the purchase, and then make monthly payments until your balance is paid off.
Score a Credit Card that Offers 0% Intro APR on Purchases
That last suggestion has always been popular with consumers, mostly because credit cards are easy to apply for and convenient to use. However, a credit card could also be the best option at your disposal depending on the type of credit card you apply for.
While there are plenty of credit cards with low interest rates or rewards programs that make using them for purchases lucrative, you’ll want to apply for a specific type of card in this instance — a balance transfer card that offers 0% intro APR on purchases — if you want to pay down your balance over time without paying for the privilege.
Why? Because, with a balance transfer card that offers zero interest on purchases, you can craft your own short-term loan without any short-term costs. And, provided you pay your balance in full before the introductory offer ends, you can score a loan with zero interest, too.
How to Make These Offers Work
Getting a card that offers zero interest on purchases may sound ideal, but there are plenty of pitfalls to be aware of.
Just because you’re not paying interest for a limited time doesn’t mean you don’t run the risk of overspending or buying something you can’t truly afford, for example. And actually, the fact you can charge a large purchase without the prospect of paying interest for a while could even make it more likely you’ll spend more than you should.
To make the most of balance transfer cards that extend 0% intro APR to purchases as well, here are some tips you should follow:
#1: Read the fine print and understand how long the introductory offer lasts.
The first step to making the most of these offers is reading the fine print and making sure you understand the terms of your new card’s offer. Keep in mind that your introductory 0% APR won’t last forever, and that the interest rate that comes after that will likely be higher than you would want to pay on whatever you’re buying.
#2: Make sure you can afford to repay the balance before the introductory offer ends.
Because the interest rate on your purchases will reset after the introductory offer is over, it’s crucial to make sure you know how much you’ll need to pay each month to pay your balance down in its entirety before your card’s introductory offer ends.
Imagine you used your new balance transfer card to buy kitchen appliances that cost approximately $4,000. If you have 15 months to pay down $4,000 with no interest, you would need to pay around $267 per month for the entire 15 months.
If you can swing the monthly payment, then using one of these cards could be the best deal ever. If you can’t, then you may be better off waiting to buy new appliances until you have the money saved up in cash.
#3: Consider offers that let you rack up rewards.
While not all cards that offer 0% intro APR also offer rewards, many do. If you sign up for one, you could easily earn 1% cash back or more on your purchase while also scoring a zero APR.
However, you should keep in mind that rewards can be a slippery slope. Earning 1% to 2% in cash back doesn’t make sense if you’re also paying a high interest rate on your balances, so make sure to only pursue rewards as part of a spending plan – and when, like we mentioned already, you have a plan to pay off your card’s balance before the introductory offer ends.
The Best Way to Use Cards that Offer 0% Intro Interest on Purchases
While there’s no hard and fast set of rules that dictate when we should and shouldn’t spend money, there are definitely guidelines to follow if you want to use credit and debt to your advantage. For starters, make sure you’re only using credit cards for planned purchases you know you can pay back. If you sign up for a new card just because it offers no interest and wind up racking up a ton of debt, you will ultimately regret it.
You should also keep in mind that avoiding interest doesn’t make a purchase any wiser if you don’t really need it. Don’t use 0% intro APR offers as an excuse to buy items you wouldn’t buy otherwise, or else you’ll wind up spending more over time.
At the end of the day, cards that offer zero interest on purchases are best for people who:
- Need to pay for pricey bills they can’t afford to pay right away, such as medical bills.
- Want to make a large purchase they can pay off slowly over time (e.g. furniture, appliances, a new roof).
- Have a plan to repay the money they borrow before their card’s introductory offer ends.
The Bottom Line
Credit cards that offer 0% intro APR can help you avoid interest on everything you buy. But, like all good things, their offers come to an end. Make sure you understand any of these card’s terms and conditions before you sign up. And, above all else, make sure you have a plan in place.
Scoring zero interest on an emergency expense or a home upgrade can absolutely leave you better off, but only when you approach the situation with eyes wide open and a plan to pay back every cent before interest charges kick in.
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