Should You Take Advantage of 0% Interest?

[Anonymous]

Hey community!

Quick question, should you take advantage of 0% interest credit cards? I've always wondered about this and haven't found much info online. Here's the way I see it but am curious to see others opinions:

If you have the money to buy something and plan on keeping that money (i.e savings) and whatever you carry the balance with won't put you over the 30% util threshold, it's okay. You shouldn't buy anything you can't afford, and it's always a good idea to keep it open for emergencies.

Am I wrong? Would love to hear your thoughts!

[M_Smart007]

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@Anonymous wrote:

Hey community!

Quick question, should you take advantage of 0% interest credit cards? I've always wondered about this and haven't found much info online. Here's the way I see it but am curious to see others opinions:

If you have the money to buy something and plan on keeping that money (i.e savings) and whatever you carry the balance with won't put you over the 30% util threshold, it's okay. You shouldn't buy anything you can't afford, and it's always a good idea to keep it open for emergencies.

Am I wrong? Would love to hear your thoughts!

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In Red ^^^^^    

IMHO  .. but opinions will vary ..

[kilroy8]

Free money is good and hard to pass up.

Key is to make sure you pay it down steadily (much more than minimum), every month, and make sure it is zero before the rate expires.

[TSlop]

I take advantage of 0% whenever I need big purchases and don't want to shell out savings and/or cash. This year both my refrigerator and dishwasher broke, so I did 18 and 12 month 0% financing, respectively, through my Best Buy credit card. I just finished off 2 years of 0% on a bedroom set. I also just did 0% through Google on my Pixel 3 instead of paying cash; I just didn't feel like dropping $500 and took 0% over points on a credit card.

I think 0% is definitely worth it as long as the payments won't bankrupt you. I'm also financially responsible so there is that to factor in. Like you said, don't buy what you can't afford. 

[Anonymous]

In theory, it makes sense when you have something much better to do with your cash (and you are certain to be able to pay off when the 0% period ends).    If it was still easy to get 5% interest on simple savings accounts, then yes.   With rates so low now, the gains are more minimal, and you have to decide if the effort is worth the return!

[Anonymous]

I personally don't like carrying balances. My BK taught me a harsh lesson on how quickly things can get out of control so I try not to carry a balance more than a few months, even if I have 0% for 12-15. It's not really worth the stress for me to use my float despite the fact I have a fixed income being on SSDI and always know that I'll have that money coming in - there's still the fear that something could go wrong, like a government shutdown or something, and that always pushes me to pay them off much quicker than I have to. 

[AceTen]

Hello! I am new here so my opinions should be taken with a grain of salt but I do make practical use of 0% cards. I like getting a new 0% card with a nice sign up bonus each year to make my big regular purchases or business and pay it off when I want. My income can vary quite a bit from month to month because I am self employed so it's nice to have 0% if I need it for a month or two.

Of course the last few months I found myfico and thusly started sweating my credit scores so I've been paying off my 0% balance to test the point gain on the various utilization thresholds. I've got better things to do that worry about a few credit score points but now I'm obsssed apprently so I'm not sure I can allow myself to carry those 1-3k 0% balances because of the drop in score. Silly me.

Some people may also elect to use a 0% balance card while using that cash to open a bank account with a sign up bonus. One could make maybe $200-$500 by holding a few thousand in a bank account to earn a bank sub and then use that cash to pay off their 0% card at the end of the 6 months or whatever time requirement for the bank bonus and pocket the $200-$500 cash. Maybe that's leveraging for the little gals and guys.

[Anonymous]

I got my first - interest card last March, an Amex Everyday Rewards. I moved most spending from my platinum except purchases that coudl get double or more points.

Each month I'd take my total balance and divide by the number of interst-free months left and pay that.

So yes, I'm a big fan of interest free - but to be clear, my utiilization is usually under 10% and has never seen 20%. LIke points, cashback, Rakuten, etc., it's a way to save some money on things you're buying anyway. If you don't need or want it, don't buy it at any price.

[wasCB14]

If 0% or a no-fee Plan It promo make something my card of choice (weighing no interest against better rewards or other benefits elsewhere), I will be pretty aggressive in using it and ignore single-card utilization.

[Anonymous]

I use them all the time, especially with new cards. If you have excellent credit, have all cards paid off, and have a high degree of discipline, it can work out well.

I'll take a new card, make my USUAL purchases on it, and max it out. The amount of spend minus the minimum payment goes into a high interest money market account. When the 0 ends, you PIF so that no interest is paid.

You must ALWAYS have the entire balance of the card in the money market account. At any given point in time you need to be able to pay the entire balance in full, just to keep the process in check so that if you have to PIF, you can.

If you can do that, and you are confident that maxing out a card won't cause issues with your other card issuers, then do it. If you are not comfortable with 99% utilization, then don't do it. Go up to a utilization you are comfortable with. 50%, 30%, etc. The amount of interest you can make is dependent on how high utilization you are comfortable with, the interest rate of your money market account, how high your limit is, and the length of the 0% offer.

The ideal is 15-18 months and total spend above 15K.