Credit Cards With 0% Interest
One of the main rules of the points and miles hobby is to pay off your balances every month. That is because carrying credit card debt negates any rewards you earn, and it can hurt your credit score. However, life also happens to all of us. I can attest to this as I went through a divorce in late 2017 and into 2018. Maybe you have a large unplanned expense that comes into your life. Having some stress lifted off you during something like this can make a difference. That is where credit cards with 0% interest rate, or balance transfer cards, can come in handy.
Initial Steps
There are some important things to consider when looking at credit cards with 0% interest. First off, read all the rules, terms, and conditions carefully. You want to know what the terms are and everything about the charges, fees, and 0% introductory interest rate. This is especially true when it comes to the balance transfer offers. Make sure that the fee to make the transfer, and the length of time that you get the 0% interest for, are the best options out there.
It is important to take your time with all of this. You do not need to jump into the first offer you see that looks like it will work. Paying for another month of interest is better than grabbing an offer that has a 2% higher transfer fee, or a nothing burger welcome offer etc.
Another thing to consider is do you want to focus on a card that is good long term too? Or, do you want to focus on a card that has a decent welcome offer to help offset some of your cost / fees? While credit cards that offer 0% interest don't always come with the most rewarding welcome offers, it can be possible to double dip this a bit so to speak.
Learn More About Cards With 0% Interest
A Potential Workaround To The Balance Transfer Fee
One thing I wanted to mention is a potential work around for a balance transfer fee. Let's say that you are carrying a balance on a card and you would like to transfer that amount to another card with a 0% balance transfer interest rate. The downside to this is that there could be a 3% – 5% fee to do so. That is no small change, especially on a larger balance, but I have a potential workaround for you.
If you grab a credit card with a 0% interest on new purchases you could pull off the balance transfer yourself, for free! What you would do is put all new charges on the 0% interest credit card you just signed up for. Next, instead of paying that card off every month you would use that same money to pay the card with the balance. This essentially moves the balance from the card with the high interest to the card with the 0% interest promo rate on new purchases.
This will only work if you have large enough charges each month to make a dent in the balance. If you have a $5,000 balance and only spend $500 a month on your credit cards then this won't work. That is because you would pay more in interest than the balance transfer fee would cost you over the timeframe of wiping out the balance.
The perfect scenario is that you have a large purchase upcoming that you had saved up for. You could use that money to pay off the high interest card and use the new 0% APR credit card for the actual purchase. These would transfer the money from one card to the other for free.
Learn More About Cards With Balance Transfer Offers
How To Make A Decision On Your 0% APR Card Or Balance Transfer Card
There will likely be quite a few options available to you when you are ready to search for a 0% interest credit card. That doesn't mean it will be an easy choice. Because of that I will give some tips on what to look for when deciding. You can then check out the current options available for 0% interest cards and balance transfer options via the links we provided within the article.
What Timeframe Are You Given For The 0% Interest Rate?
Maybe the most important thing to consider is what kind of timeframe does the credit card offer at a 0% interest rate. Is it giving you 12 months, 18 months or maybe even 24 months? You don't necessarily need to take the longest option available, since you may not need all of that timeframe. The longer the timeframe offered the more likely the card's rewards earning rate and welcome offer are below average too.
This is all to say the first thing you need to do is set up your payment plan. How much can you afford to put towards the debt each month? How long will it take you to pay it off at the 0% interest rate? Answering that should give you a good idea of which 0% offer timeline works best for you.
Learn More About Cards With 0% Interest
What Is The Balance Transfer Fee?
Next up, you will want to pay attention to the balance transfer fee. Assuming you need that option of course. If you are in need of a balance transfer card I would first consider the option I shared above. Avoiding that 3% – 5% balance transfer fee can keep several hundred dollars in your pocket.
If that isn't an option then you will want to pay attention to the fee charged for the balance transfer fee. This can add up quickly on a large transfer. On a $10,000 balance a 2% difference can cost you an additional $200, so be sure to look closely at that.
You will want to consider this in tandem with the timeframe you get on the 0% interest rate. It may be worth it to pay a 1% higher balance transfer fee if it gives you 6 months longer to pay off the amount, and you know that you will need it.
Learn More About Cards With Balance Transfer Offers
Will The Card Be A Long Term Earner?
Another thing to think about is what does the card offer to you long term? If you don't need an 18 month+ 0% interest credit card then this opens up some more options. The cards that offer 18 months or less are usually the ones that can make sense long term too. They could be 5% / 5x rotating category cards, or a card that earns 2x on every dollar etc. These are excellent cards to have in your toolkit long term, and they can offer you the 0% interest rate you desire too.
What Kind Of Welcome Offer Does The Card Offer?
Another portion of this to consider is whether or not the card has a compelling welcome offer or not. While balance transfers will not count towards the minimum spend required to earn the welcome offer, getting one could help offset the balance transfer fee. Or, it could help reduce the amount owed if putting a large purchase on a 0% interest card.
While the offers are not usually as large on cards with balance transfer and interest rate promos, they can still net you $200+ in value if you find a card that fits your need.
Credit Cards With 0% Interest: ToP Thoughts
If you can get the 0% interest offer trifecta, then you really hit the nail on the head. That would be grabbing a credit card that offers a 0% interest rate for the timeframe you need, offers a compelling long term earning structure AND gives you a welcome offer worth $200+. That is what I would be shooting for when deciding on which card to pick. You also need to focus on the balance transfer fees if that is needed, and make sure the overall 0% timeframe fits your needs. Hopefully one of the cards from the links we supplied above does just that for you.
Do you make good use of 0% intro rates? Come join the discussion in our Facebook group!
