Credit Cards

3 Pitfalls to Avoid with 0% Introductory APR Credit Cards

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Beware of 0% introductory APR cards to avoid losing money.

Key points

  • A 0% introductory APR card can make it easier to pay off an existing credit card balance.
  • It is important to be careful when applying for and using these cards.
  • Keep an eye on your introductory rate period, credit score, and how much you use the card.

One of the benefits of using credit cards is having the flexibility to pay for your purchases over time if you can’t cover them in full on the spot. However, in exchange for that flexibility, you’ll usually have to pay interest charges which can be costly, unless of course you qualify for a 0% introductory APR credit card.

It’s common to find 0% introductory APR offers on particular balance transfer cards. But if you’re going to get a 0% introductory APR credit card, you’ll really want to avoid the following three pitfalls.

1. Thinking your introductory rate lasts longer than it does

When you open a 0% introductory APR card, you only get a limited period of time without paying interest. Once that period expires, the interest rate you accrue on your balance can be substantial. That’s why it’s important to look at your card details and make sure you know when that introductory period will end. You can get up to 18 months of 0% interest, or that introductory period can expire after 12 months. Read the fine print so there are no doubts in your mind.

2. Ignoring credit score requirements

Generally, you’ll need fairly good credit to qualify for a credit card with a 0% introductory APR. If your credit score could work, you may want to increase it before applying for the card. Every time you apply for a new credit card, an extensive inquiry is made against your credit report, which can lower your score by several points. And while that little drop isn’t usually terrible, there’s no point in going through a tough query for a card you’re unlikely to qualify for.

3. Use your card for everyday purchases

It is common to use a 0% APR card to pay off existing debt. In fact, many balance transfer cards offer 0% introductory APRs for this reason. But you may not want to use one of these cards for smaller everyday purchases.

Chances are, things like weekly groceries and gas fill-ups are purchases you can pay for as you go. And you may be eligible for more cash back or rewards on those purchases using another credit card

On the other hand, you may want to use a 0% introductory APR credit card for a larger purchase, one that you know you’ll have to pay off over time. Let’s say you need a new laptop or new furniture for your home. If you’re spending $1,200, you may need to spread that purchase out over 12 months. If your 0% interest rate is good for 12 months, it’s a reasonable approach.

Proceed with caution

Opening a 0% introductory APR credit card could be a smart move, especially if you have existing debt that you want to pay off more of in a more cost-effective way. Just be careful when applying for and using these cards so you don’t end up racking up expensive interest, ruining your credit score, or missing out on more generous rewards elsewhere.

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