Using credit cards with a 0% introductory rate can be a smart move for several reasons. These cards offer you the opportunity to charge your monthly expenses with no interest and then pay them off as soon as your income rolls in. This method is great when your income stream is uneven and your payments do not precisely match this revenue timetable. The key is to make sure you pay off your balance each month so that you do not accumulate debt, which will be there when the card begins to charge interest as it will do in a few months.
Some things to watch out for when using this method are late fees and a changing interest rate. Always pay on time so that you do not incur the hefty late fees which are often hidden in the fine print. Even if you are only a day late, you may be charged a large late fee as well as lose your 0% introductory rate. Have a plan for making the minimum payment on time so that you will never be charged a late fee and will not lose your introductory rate. One easy method is to pay automatically from your checking account. You can also make payments on the balance at other times, but make sure you get your minimum payment in on time.
Sometimes it is easier to have a separate 0% credit card for payments like auto, student, or house loans, which pay these automatically when they are due. That way, you are not late on any of those payments either, no matter how your cash flow varies. Be sure and keep paying on the cards, otherwise you may be incurring double interest on these debts if you let the balance on the card build up.
Another way a 0% interest credit card can be used is to consolidate the balances of other credit cards. If you are behind on paying these other cards because of their high interest rates, paying a lower rate of interest or none at all on a 0% interest credit card makes sense. Transfer the balances and make a single payment. If there is no interest, you will be paying off the debt itself, rather than interest.
Be sure to look for a card that has a year, or possibly longer, at a 0% introductory rate. This rate won’t last forever, so you will be shopping around for another 0% rate card in a few months. Also, be aware that balance transfers aren’t always free – they may come with a 3% or similar transfer fee. You actually increase whatever debt you are transferring by the amount or percentage of the transfer fee. While it is possible to call the credit card company and try to negotiate, there is no guarantee that the fee will be waived.
Plan well, and you can use 0% interest credit cards to your advantage!