Zero percent credit cards can greatly benefit you if you can be financially responsible with them and you read over the terms and conditions before applying for one.
Cards with zero percent interest offer this 0% APR rate for a promotional period, generally between 3-15 months depending on your application and credit history. There are a number of ways that zero percent credit cards can benefit you by making you money, saving you money, allowing you to pay for big purchases over time, and more.
Big purchases with no interest –
One way zero percent offers can benefit you is by allowing you to make a big purchase without having to pay interest on it for as long as the 0% period lasts. Of course you’ll need to have a plan in place to have the money on hand when the offer ends, so plan out your purchases and be sure to save up to pay it off while making the minimum payments until the 0% offer expires.
Earn interest on your money –
If you have the money already for your purchases, why not put it to work for you? Simply put your money in a high interest savings account that is fluid (you have to be able to access it anytime) and make all your purchases with the 0% card. Since you only have to make the minimum payment during the 0% offer period, you’ll earn interest on your money that would’ve went to paying the bill in full each month. After the offer expires you can still ‘float’ your money this way to keep making interest off it, just make sure you have enough for each bill to pay the bill in full once the 0% period ends.
Get cash –
Many credit cards offer cash back rewards programs which are generally a better deal then any points programs. If the 0% card you are applying for has a cash back rewards program, go for it. Sometimes you’ll get cash back instantly to your account after your first purchase and on any cash back card you’ll get cash back on every purchase you make. Couple this with stashing your money in a high interest savings account, and by the time the promotional period is over you’ll have racked up cash back from the credit card to redeem AND earned interest on your money. Plus if you find yourself a little short come the first bill after the promotional period, redeem your cash back to put towards paying down the bill quicker.
No interest loans –
In some cases a 0% credit card will come with the option to essentially have a check sent to you in the amount that is close to your total credit limit on your credit card. You can cash this check and deposit it in a CD (that has a shorter period then the 0% offer) or a high interest savings account. Just make sure you have enough to pay the minimum each month. Also this method is getting harder and harder to pull off, read the fine print before ever trying this; many credit cards issue ‘convenience checks’ that are essentially cash advances if used. They do not fall under the promotional rates and come with high interest rates. Many people ‘play’ the credit cards this way, it can be risky and should only be done by those with enough money in the bank to protect against this backfiring.
Transfer high interest debt –
Some balance transfer offers come with 0% promotional rates, great if you have a balance on another credit card that has high interest rates. Be aware that most of these 0% balance transfer offers come with a transaction fee of around 3% of the total balance or a 50 dollar minimum. This can be a small price to pay for the amount you’ll save in interest payments on the previous card. Check the interest rate after the promotional period, sometimes this rate can be higher then your old card or different from the standard interest rates.
These are some of the ways a zero percent credit card can benefit you and if done properly you can save money and even make some money along the way. It can be tempting to overspend on 0% cards so be careful and use the 0% time to assess your financial situation along the way so you can avoid interest altogether or minimize it. Depending on the state of the economy and the market, 0% offers may be widespread or nearly impossible to find.