When 0% APR Can Really Help |
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by: Janna Weiss
One of the biggest downfalls of using credit cards to make purchases is the interest rate. If you carry a balance from month to month, you can expect to pay more for your purchases than if you’d paid cash. But some cards offer phases where you don’t have to pay interest at all. What does 0% APR actually mean, and when can it come in handy?
0% APR means that no interest charges are applied to purchases during a specified period. These periods can vary in length, but competition has urged most card issuers to offer about a year of 0% interest. If you know that you can pay off your balance within that time period, 0% APR credit cards can be a boon. If you’re not so sure, watch out; interest rates are climbing, and you’ll get hit with them once your 0% period runs out.
So when is it a good idea to apply for a 0% interest card?
If you’ve got a situation where you’ll be making lots of one-time purchases, a 0% APR credit card can really make life easier. Consider moving expenses. You’ll need to hire movers, pay a deposit or rent at your new address, and probably make deposits on utilities. If you’re replacing some furniture and other items, tack on extra expenses. Instead of using a regular credit card to pay off those purchases plus interest, think about opening a 0% interest card. That way, you’ll have up to a year to pay off the purchase price without paying extra. You can always cancel the card once the balance is paid off.
Holidays are also good times to indulge in some guilt-free shopping. Use a 0% interest credit card to pay for gifts and entertaining expenses. As long as you can pay off the balance before the holiday rolls around again, you’ll have saved quite a bit of money on interest.
Emergencies happen, and it’s like adding insult to injury (sometimes literally) to have to pay interest on medical bills and car repairs. If you’ve been hit with big expenses like these, you might want to get a 0% interest card and use it to pay. Another alternative is to transfer your existing balance from other cards to the 0% card. But watch out for balance transfer fees. You want to make sure that you’re actually saving money by transferring your balance.
When shopping for a 0%APR card, be sure to do your homework. Some cards have hefty fees for enrollment, or even monthly membership fees. You don’t want charges like that to minimize the money you’ll save with 0%APR. There are plenty of good cards out there. Some card issuers even extend special 0% offers to their loyal customers. Check with your bank and your card company to see if they have a deal that’s right for you.
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