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- Interest-free promotional credit card campaigns are used by people who need to carry more balance.
- But I chose to carry a balance during the promotional period so I could pay off my car loan early.
- I had to make the minimum payment, consider my credit score, and plan ahead to have enough cash.
As someone who likes to use credit cards to earn travel rewards, I’m always looking for ways to earn points and miles.
0% APR financing on my credit cards is not something I’ve ever looked for, as I always avoid paying interest by fully paying off my balances. However, after a new rewards card was approved, I later realized that it comes with 15 months of 0% initial APR financing for both new purchases and balance transfers.
As I always try to maximize the benefits of my credit cards, I couldn’t let this valuable offer go to waste.
Insider’s Featured Introduction APR Credit Cards
0% initial APR on 18-month balance transfers and 6-month purchases
15.74% – 26.74% Variable
0% initial APR on 21-month balance transfers (transfers must be completed within 4 months of account opening) and 12-month purchases
16.74% – 27.49% Variable
0% initial APR on purchases and balance transfers for the first 15 months
18.74% – 27.49% Variable
How did I use the 0% initial APR for 15 months?
When I applied for Chase Freedom Unlimited®, I applied to take advantage of another starting offer, but I also knew I could combine these rewards with Final Rewards points from my other Chase accounts, such as the Chase Sapphire Reserve®.
However, it was only after I received my first statement that I remembered that this card included 0% initial APR on purchases and balance transfers for the first 15 months (then regular 18.74% – 27.49% Variable APR). I immediately rejected the idea of using this offer by making a balance transfer, as I would incur an initial balance transfer fee of 3% ($5 minimum) if I was transferred within 60 days of account opening. However, it occurred to me that I could carry a balance on this card for 15 months without paying interest.
I used this card for all my daily expenses, even for purchases that could bring a similar or smaller bonus with other cards. With all my household expenses going through this card, if I had only been making the minimum payment, I would have reached my card’s credit limit of $18,000 in a few months. There was no cost to do this as no interest was charged as long as I paid off the entire balance before the promotional finance period expired.
Considering the disadvantages
Interest-free financing may sound too good to be true, but as a credit card expert, I know that these offers have many potential pitfalls.
1. I still had to make the minimum payment
First, I will have to make the minimum payment each month — interest-free does not mean non-payment. Making payments reliably was easy by setting up automatic payments and configuring them to make only the minimum payment each month as listed on their bank statements.
2. I had to consider the impact on my credit score
I also realized that carrying up to $18,000 in debt each month can hurt my credit score. Amounts owed make up 35% of your FICO score and are more than any other factor. Fortunately, the amount you owe is considered relative to your total credit, a factor called your loan utilization rate.
Having a significant balance on this single card did not significantly lower my credit score, as I have many credit cards with little or no balance each month. However, if I were planning to buy or refinance a home, I wouldn’t be carrying a balance with or without 0% APR.
3. I had to make sure I had money to pay
More importantly, I had to make sure I could use the full amount in cash after 15 months, or I would start paying interest on the remaining balance. And as all credit card users should, I’ve had to fight any urge to spend more than usual thinking I’ll pay later.
4. I had to ignore my own advice
And finally, I had to go against every instinct I had and every advice I wrote. I would be carrying a balance and making the minimum payment, two things smart credit card users should never do! However, I was able to break this rule at no cost by paying the entire balance before the promotion rate expired.
Using 0% initial APR helped me pay off my car loan early
I was able to actually improve my finances by carrying around $18,000 credit card balances for over a year. I could have made larger purchases before receiving the income, but I was careful not to push myself too far.
And towards the end of my promotional finance period, I decided to pay off one of my car loans early, something I couldn’t do otherwise. It was a very low interest loan, but it was good to pay off that debt early.
Interest-free promotional financing offers are mostly used by people who need to have a balance. But for those without a balance, these offers can be a valuable way to ease your finances a bit and even pay off some loans early.
By understanding the risks and benefits of these offers, you can make the right decision for your finances.