With so many different credit card perks and introductory offers available, it’s natural to wonder if a 0% APR credit card is a good option. Like most things, there are pros and cons to consider before making a decision. This article will provide you with all the information you need to determine if a 0% APR credit card is a good addition to your wallet.
Pros of 0% APR Credit Cards:
1. Pay off large purchases without interest: If you have a large purchase coming up that you won’t be able to pay off immediately, a 0% APR credit card can give you some extra time to pay off the purchase without accruing any interest.
2. Pay down an existing balance without accruing interest: If you’re carrying a balance on another credit card, you may be able to transfer that balance to your 0% APR credit card. This allows you to work on paying down the balance without accruing any more interest.
3. Improve your credit score: Paying down debt can help boost your credit score by lowering your credit utilization ratio. Additionally, making on-time payments on your credit card is the most important factor used to determine your FICO credit score.
4. Earn rewards: Some 0% APR credit cards offer additional rewards programs, such as cash back or rewards points. This can lead to more savings, including a welcome offer and cash back or rewards points based on each dollar you spend.
Cons of 0% APR Credit Cards:
1. 0% doesn’t last forever: It’s important to remember that the introductory 0% APR period will eventually come to an end. If you haven’t paid your balance in full by the time it does, you’ll be hit with interest on that balance when the period is over.
2. Balance transfer fees: If you want to transfer your balance from another card to your 0% APR credit card, you’ll be charged a balance transfer fee. While it is usually lower than the APR you’re already paying, it’s still an additional fee that should be factored in.
3. Strict terms and conditions: Some cards only apply the 0% APR offer to new purchases and don’t extend it to balance transfers. Additionally, most cards will cut your 0% APR period short if you have a late payment. It’s important to read and understand the terms and conditions of your offer to avoid any surprises.
4. False sense of security: It’s important to remember that paying off all credit card balances in full each month is recommended. While a 0% APR period can be beneficial, if it tempts you to overspend and accumulate more debt than you can pay off, it may do more harm than good.
Is 0% APR worth it?
Whether a 0% APR credit card is worth it depends on your financial goals and habits. If you can pay off or significantly pay down your credit card balance during the 0% APR period, it can save you money and prevent you from paying unwanted interest. However, if not accruing interest tempts you to overspend, it may not be worth it in the end.
In conclusion, a 0% APR credit card can be a great option for paying off a credit card balance without accruing interest. However, it’s important to consider the card’s terms and your own debt payment plan before applying to ensure that you will benefit from the 0% APR offer.