Charles H. Miller
Zero-interest credit cards are useful as they can help its owners in many ways. Overspending is not one of those ways; rather, these sort of products are ideal to get you back on track, or to help you fund some big purchase you would be making anyway.
If you qualify for a card with 0% APR — which usually means you have a FICO score of 690 or higher — you should carefully think and rethink what are you going to use this card for. Here are 3 tips that should help you use one of these cards to your advantage…
1. Pay Down Your Debt
This should be the main point of a 0% credit card — to move balance from a card that has a high APR to the new one that doesn’t charge interest. There are two things you should know though: 1) In most cases you will have to pay the balance transfer fee, which is typically 3%; and 2) You should pay your balance on time to avoid paying penalty fees. Also, remember that 0% APR period doesn’t last forever. Add to your calendar the day when it expires, cause getting to the regular (ongoing) rate will have a profound impact to your spending habits.
2. This Could Be Your Rainy Day Fund
Speaking of habits, you should work towards having some amount of cash set aside for rainy days. However, not everyone is able to accumulate enough money for that purpose, and that’s where a credit card with 0% APR could kick in. Similarly, if you need more money than you have in your rainy day fund, a card with 0% APR could supplement your cash reserve. Like you would do with cash, this kind of credit card should be used only in case of emergencies. Or, you could…
3. Use It For That Big Purchase
You will need to make some big purchases from time to time, and with a card offering 0% APR (on purchases) you can do that without paying any interest. As long as you make your payments on time, you won’t have to sweat over the interest. It is preferred that you don’t carry too much balance from month to month, cause sooner or later, you will have to pay the full amount of the goods purchased.
Final Word
To summarize, credit cards with introductory period of 0% APR can be a great tool if used correctly. Primarily, they should be used to help you get out of debt. Other good uses include setting it aside as a rainy day fund or to fund a big purchase you would be making anyway.
There are many card offering 0% APR for a number of months, and selecting the right one can be a pain. Perhaps the links below this article could help you discover the card that works best for your unique needs. Check it out.
