How to Use 0% Interest Credit Cards the Smart Way

If you need money now and have solid credit, a common financial strategy is to sign up for a new credit card with a 0% APR. Promotional no-APR credit cards don’t charge interest on your spending until the promotional period ends. As long as you pay the card off before the promotion ends, it won’t cost you anything to use. 

This strategy requires you to be savvy to maximize the promotional period and pay off the card balance before interest rates hit. Here’s how to make sure you’re taking full advantage of a no-APR credit card. 

When to apply for a 0% APR card

Since the 0% APR on your credit card is only valid for a limited promotional time, it’s smart to time your card application strategically to take advantage of that window. Some scenarios when you might want to open a 0% APR card, include:

  • Consolidating your debt during a debt repayment journey

  • When planning a major expense 

  • When there’s a welcome bonus offer for new cardholders.

  • Before a period of heavy spending, like back to school shopping or holiday shopping. 

Since you want the largest window possible to repay your debt, you wouldn’t want to open the card until you were ready to make your purchase. If you’re approved for the card, the promotional clock starts ticking for you to repay any charges to the card while there is 0% interest. 

After the promotional period ends, not only will the interest rate hike, but you could find yourself paying interest on purchases from the date they were made, not from the date the standard interest rate kicks in. 

Best strategies for opening a 0% APR credit card

While a 0% APR credit card can be a smart financial move, it does require some planning to make it work in your favor.

1. Make a payment plan

The most important part of your no APR credit card strategy is going to be creating a payment plan that allows you to safely repay the balance before the promotional period expires. Make sure that your income can support your spending on the card, and you have a strict repayment plan in place so you don’t spiral into debt. 

2. Review the terms

Another important part of your strategy will be to find the best 0% interest credit cards that you qualify for. Every card will have different terms and you want to make sure you’re getting a card that will best set you up for success. A few details to look for while researching 0% interest credit cards are the:

  • Length of the promotional term. Not every 0% APR promotional period is the same length — some are as low a three months while those with strong credit may be offered 18 months of no-interest card use. Make sure you understand exactly how long the offer lasts for each card you’re comparing. 

  • Interest rate after the promotional period. If you don’t expect to repay the full balance on the card by promotional expiration date, compare the cost of keeping a balance on each card. Sometimes, even when planning ahead, unexpected events make it hard to stay on top of card payments. Review the total APRs in case the worst-case scenario happens. 

  • Fees. Note any annual fees that might be charged after the promotional period ends, otherwise you could end up paying interest on your purchases in addition to an annual fee. Also, there could be a balance transfer fee, if you used a 0% interest credit card to consolidate your debt. This might increase the cost of your debt consolidation strategy. 

3. Compare cards online

Don’t settle on the first 0% APR card you find. There are many different options out there to choose from so it’s a smart idea to shop around online. Beware of applying to too many cards at once as your credit score could be negatively impacted. Create a spreadsheet to list the features of each card, along with the length of their promotional periods, so you can decide which card is best for you.

4. Time your application

Not only should you try to time your application so you can have the longest possible window to repay your purchase after you make it, but it’s also helpful to time it with any promotional offers the credit card company might have. Though this is a secondary consideration, extra rewards points could be used for cash back or put toward your purchases. 

This effectively lowers the amount you’ll spend while using the card. It’s worth considering even though it might not always be possible to make the timing work out in this regard. Regardless of which credit card you sign-up for, practicing responsible credit card habits is what makes strategy effective. Spend only what you can afford to repay, make on-time payments, and pay off the entire card balance before the promotional rate expires. 

Need help creating a debt repayment plan? The team at The Financial Gym can help — schedule a consultation with a financial coach today.

The Financial Gym Team Credit Cards