When to Apply for a 0% Interest Credit Card

“How can a 0% APR credit card help me get out of debt?”

Whether or not you’re looking for a new card, a 0% interest credit card offer can be a tempting offer when it finds its way into your mailbox.  But how do you know if it’s right for you? Here are five ways a 0% intro APR credit card can come in handy and what to look for in an offer before you apply.  

What does 0% APR mean?

These days, there are several low interest credit cards on the market offering 0% introductory interest rates (APR). A 0% APR offer means that you won’t have to pay interest on your purchases for a specific time period. Depending on the credit card offer, the 0% introductory interest rate can last anywhere from six months to over a year.

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When is it a good idea to apply for a 0% interest credit card?

1. Pay down high interest credit card debt.

When you’re in debt, interest payments and late fees can make paying off your credit card balance seem impossible. However, making a balance transfer to a credit card with a 0% promo APR can be a great help in quickly reducing your debt.  Several credit cards now feature 0% introductory interest rates for up to 18 months. By consolidating your debt with a new credit card that has a 0% APR period, you can simplify your payments and focus your efforts on paying off your card as soon as possible. Not only will you have more time to pay down your debt interest-free, making regular payments on time will also help improve your credit score.

2. Buying a big ticket item or facing several one-time purchases

Whether you’re planning a vacation, buying a new major appliance or facing several one-time purchases due to a recent move, a credit card with a 0% APR promo rate can make your life easier. Instead of using a regular credit card and paying for those items plus interest, a 0% APR credit card can help you stretch out your payments over time – without paying extra for your purchases.

3. During the holidays

Using a 0% interest credit card during the holidays is a great way to lessen the financial strain from gift shopping and entertaining expenses. Plus, several credit cards feature a 0% APR period and generous cash rewards, with extra perks during the holiday season such as 5% cash back at major online retailers and the ability to pay with your rewards at Amazon.com. As long as you can pay off the entire balance during the introductory period, and you either don’t make purchases or your purchase APR is also at a promotional 0%, you can avoid paying interest.  

4. Pay down other types of loans

Unknown to most cardholders, you can use 0% APR balance transfer offers in order to get ahead on larger loans like college student loans, car loans and even home equity lines of credit. The best time to use a 0% balance transfer for this purpose is when you are close to paying off a particular debt – if you know that you can completely erase the balance during the introductory period, otherwise you can face an extremely high APR at the end of the introductory period.

5. Use an emergency fund

Accidents and emergencies happen. When you’re facing substantial medical bills or car repairs, a 0% interest credit card offer can be life saver. Having a low interest credit card that is only used to finance unexpected expenses outside your day to day budget is a good way to be prepared for financial emergencies. Since you won’t be using it on a regular basis, you want to find a credit card with a high enough limit to cover the average sudden expenses (car problems, home repairs, airplane tickets, a hotel stay), but with a low enough interest rate so you can pay the card off quickly once life returns to normal.

What to look for in a 0% APR credit card offer

When you’re comparing 0% APR credit card balance transfer offers, it’s important to look at the length of the introductory period and the ongoing APR just in case you won’t be able to pay off your transferred debt before the promotional rate expires. Make sure you understand what the go-to annual percentage rate (APR) is as well as any other features like a rewards program. Also, make sure to take into account balance transfer fees, which can range from 2% to 5% of the transfer amount. By taking the time to research your options, you’ll find the 0% APR offer that’s right for you to get out of debt and get one step closer to financial freedom.

Discover card believes that consumers should be armed with the information they need to help them make informed credit decisions.

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

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