How to Use 0% APR Credit Cards to Your Advantage
Have you ever been shopping for something and when you checked out they offered you 6 months same as cash financing? That is what 0% APR credit cards offer, except it is for all of the purchases that you make on your card. 0% APR credit cards allow you to make all of the purchases that you want, and for a given amount of time you will not pay any interest on the balance that you leave on it. You just have to make your minimum payment and the rest of your balance will just stay there and not accrue any interest. But your 0% rate does not last forever. There is a reason stores and credit cards make this offer and you need to be well aware of it before you take advantage of a 0% APR credit card. That is ,once the time period for a 0% APR card expires, you will be paying a pretty hefty interest rate on the balance that is left. And that’s exactly what they hope you will do.
What Interest Does to the Purchases that You Make
Depending on what interest rate you pay on anything you bought will determine how much something actually costs. Chances are that if you are paying interest on a credit card, or to a store where you made a purchase, you could end up paying double for the item that you bought. This is why you need to avoid interest at all costs. You wouldn’t pay double the price for a new TV when you went out shopping for one. So why would you allow that purchase to charge you interest in the future, making the price you actually pay for it more? Going out to buy something, other than a home, with the mentality that you are going to finance it will always cost you a lot more than it is worth. Your goal should always be to get what you want at the lowest price possible and then, if you want, do a little extra work and use a 0% APR credit card to make that price even lower.
Take Advantage of your 0% APR Timeframe
0% APR, or same as cash financing, can be a good thing and you can actually use it to pay less for something you bought. And the way to do this is to take the cash that you were going to use to pay for an item and place it in something that earns you interest. There are many options for this such as a money market account, a CD, or a savings account. These things are guaranteed not to have any losses and you will earn interest on the money that is there. And the best part is that the amount of interest that you earn will deduct from the total price that you paid for an item. It takes a little extra work but it can be well worth is if it saves you money.
0% APR credit cards are a tool that the credit card companies use in the hope that you will let the 0% time period expire and still have a balance on your card. If you plan ahead you can take advantage of what they are offering you and save some money in the process. As long as you make sure that you have the money to pay off your debt when the 0% interest rate expires then you will be good to go. And if you put the money in the right place, you will be on your way to paying less for an item then what was on the register when you checked out. Doing the exact opposite of what the credit card company hoped you would do.
Matthew Coan is a writer for the startup website Casavvy.com. Helping people save as much money as possible by utilizing credit cards, checking accounts, and savings accounts.
Category: Credit Card
