A great way to save money and earn reward points is to use a 0% purchase credit card (note that these 0% rates are introductory).
These cards can be a great way to avoid paying interest while gaining credit card benefits, rewards, miles, or cash back. Additionally, 0% purchase credit cards offer an opportunity for you to make a slightly larger purchase, and pay it off over time.
Another bonus is the fact that many of these credit cards also come with 0% balance transfer offers.
It’s important to understand, though, that 0% Introductory rate purchase credit cards should be used carefully, and with planning.
When used as part of a plan, o% Introductory rate purchase cards can give you the advantage of a great introductory rate, and the ability to rack up the points or miles. And, because you have an introductory period, you can take two, three months, or longer to pay off a larger purchase.
Don’t Use the 0% Introductory Rate, or the Rewards, to Justify a Purchase
When using your 0% credit card to make purchases, make sure they are planned out.
If you have been meaning to make a larger purchase, a credit card with an introductory 0% APR on purchases can be a good option. Before you make the purchase, though, you need a plan to pay it off. Avoiding interest at first doesn’t do you much good if you can’t pay off the entire purchase quickly. Otherwise, you will end up with a higher interest rate when the 0% expires and it could be enough to offset any rewards points you earned with the purchase.
Additionally, Don’t Buy Something Just for the Rewards Points.
The best 0% Introductory rate purchase credit card is one that gives you rewards for your purchases, on top of helping you avoid interest. Don’t use the card as an excuse to buy things you haven’t thought out, though.
A rewards card with a 0% introductory on purchases is best used to make expected buys that can be paid off quickly. Otherwise, you become trapped in a debt cycle that costs you a great deal in interest.
Here’s My Trick to Make Sure You Pay Off Your Purchases Before the 0% Expires
So you know what can happen to balances you have once the 0% expires? You can possibly get charged interest on the entire balance you ran up (this tends to be true on retail credit cards like you would get at an electronics store, for example).
Figure out the month your 0% offer is expiring. Now set up reminders in Google Docs, or anywhere else that works for you, a month before that expiration date that tells you to pay your balance off NOW!
Don’t get stuck paying interest by having a balance after the 0% expiration.
Now don’t go crazy buying stuff you can’t afford. This seems obvious but some people get crazy with 0% card offers. A zero percent interest rate doesn’t mean you aren’t paying anything back; you still have to pay a minimum.
With that said, I like to always have the money to pay the balance off. But with 0% you only need to pay the minimum due.
What do you do with the extra money?
If rates are good with online savings accounts you can put the difference every month there and let it earn interest. Or you could put money aside in a CD for the approximate 0% term (remember you want to pay your balance off before the 0% interest rate expires). This way, you are earning money on the balance while you enjoy your 0% terms.
Who Qualifies for 0% Purchase Credit Cards?
For the most part, you need to have good credit to qualify for a 0% Introductory rate purchase credit card.
As with all loans, you get the best terms when you have better credit.
This is the case even with credit cards.
While credit cards are among the easiest loans to obtain, you won’t qualify for the best credit cards unless you have good credit. Before you apply for a 0% Introductory rate purchase credit card, make sure that you have great credit (there are a number of places to check your credit score). That way, you will end up with the best terms — including the longest possible term for your introductory rate.
The Best 0% Purchase Credit Cards Offers Available
If you want a 0% Introductory rate purchase credit card, there are a number of options.
Here are some of the better ones to choose from:
Discover it® Card
The new Discover it™ offers up 14 months of 0% APR and both purchases and balance transfers*. (There’s a 3% balance transfer fee.)
Discover revamped their card with the goal of changing the way people think about their cards. There’s no annual fee, no overlimit fee, no foreign transaction fee, and no pay-by-phone fee. They even waive the late fee on your first late payment and won’t increase your APR for paying late (though you really should do your best to pay on time)*.
You are also getting 5% cash back for online shopping and department store purchases through December 2014 on up to $1,500 in purchases (sign up is free and easy). All other purchases earn you unlimited 1% cash back*.
On top of all this you’re also getting your free FICO® credit score on your monthly statement!
The Discover it® is a nice overall card with cash back and a nice 0% APR term on purchases and balance transfers. (See our Discover it® review.) Click through the Apply Now link for details on fees, rates, rewards, and other details.
Apply Now for the Discover it® Card
Citi Simplicity® Card
This card from Citi gives you a nice 0% introductory APR on purchases for 18 months. You also get the 0% APR on balance transfers for 18 months as well.
The Citi Simplicity® also offers no late fees or penalty rate as well as no annual fee. And you will have peace of mind as you will have direct access to a service representative.
With a year-and-a-half to pay off a balance, this is one of the longest 0% Intro APR terms on the list.
When my wife and I were planning our wedding we applied for a 0% Introductory rate purchase credit and put whatever purchases for the wedding we could on it. We paid the minimums every month and put the difference of what we owed every month into an online savings account to earn interest.
At the end of the 0% term we not only earned interest but we also earned enough rewards points to help pay for a bedroom furniture set!
A Zero Percent Purchase Credit Card Can Be a Great Tool When Used Correctly
Before choosing a 0% Introductory rate purchase card, consider your needs.
Will you also be transferring a balance? Do you need more time to pay off a planned large purchase?
Consider, too, whether you want a rewards program, or whether you are more interested in a lower interest rate.
No matter what you choose, though, it’s important to make sure that you use your 0% Introductory rate purchase credit card as part of your financial plan. When you don’t, you could end up in a great deal of debt, squandering the value of your 0% purchases.
*As you always should, make sure you read through the card details to make sure this card fits your needs and you understand the terms and conditions. Be aware that the terms may change after this article’s publication.
“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”
*This content is not provided by Bank of America. Opinions expressed here are author’s alone, however this site may be compensated by Bank of America.
* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the “Apply Now” button, you can review the credit card terms and conditions on the issuer’s website. Discover is a paid advertiser of this site.
Joe @ Retire By 40 says
I have Chase Freedom card. It’s convenient and I haven’t feel the need to get anything more.
Glen Craig says
If you have a card that works for you then roll with it. I have one go-to card that I use for about 99% of my purchases. It also happens to be the card I got for a 0% intro APR promotion.
Some good advice for the best 0% credit cards. What I always like to point out is that having too many cards is potentially dangerous and makes it harder to keep track of finances, and when the introductory offers each of them run out. I’ve been with Citi for a few years now and I’ve found them to be great!