At first, it sounds too good to be true. 0% financing basically means you can borrow money for free, and as you know, nothing comes free in this world. However, there are legitimate 0% interest deals out there to be had, especially when it comes to credit cards. Some card companies will offer these opportunities as a way to get you to sign up for their card, and you can definitely benefit if you use this chance wisely. It can go wrong, however, so it’s important to pay attention.
Let’s look at four ways in which 0% financing can work out nicely for your needs.
Knowing the Rules
One of the smartest things you can do in this situation is take a little time to learn the relevant rules of the card in question. Don’t simply see the stated APR of 0% and assume that everything which goes on the card will be interest-free.
How long does that interest-free period last? Does it apply to everything, or only to new purchases?
It might take a few minutes to read through the information that comes with your card. However, that would be time well spent. Your chances of making this opportunity work out for you depend greatly on your willingness to read the fine print.
Making a Plan
Often, 0% cards will be used for balance transfers. This is a way to pay down debt without having to spend money each month on interest charges. Before you decide to use such a plan, do some basic math to see if transferring your balance will be worth it in the end.
There is typically a balance transfer fee involved with going this route, so compare that expense to the savings of not paying interest for a period of time. Remember, that interest-free period is going to expire at some point, and you might not be able to pay off the entire balance before it does.
Don’t Use It Unnecessarily
The money you spend on a card which has a 0% interest rate is still money that has been spent. Sure, you may not have to pay interest on it for a period of time. However, that doesn’t mean it was free money.
If you use this opportunity to buy things that you wouldn’t have purchased otherwise, it will have been a waste. Only use 0% financing for things you actually need to buy or would have bought anyway even without the financing deal.
Monitor Your Credit Score
Constantly applying for new credit deals is not the best idea when it comes to the health of your credit score. As you shop around for 0% deals, make sure to avoid going overboard in the pursuit of an endless stream of 0% APRs.
Sure, it would be great to save a bit of money, but that will only be worth it is the savings are significant enough to warrant the credit score impact. Take all factors into account before taking any action.
Have you ever tried a balance transfer to save money on interest? What other financing offers have you tried?
Photo courtesy of: Goumbik
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