0% Credit Cards

10 Replies

I'm sure this has been discussed in some fashion almost ad-nauseum on here, but I wanted to see what people think about using either new card offers with 0% interest for the usual 15-24 months, or balance transfers with the same type of terms.

I am currently remodelling my home, and I usually have at least 2 or more 0% balance transfer offers for 15+ months on several of my credit cards, and always am getting new offers from my banks or in the mail for new ones. I know this isn't something I want to repeat often, but I can't seem to find a good reason not to finance my remodel this way. It's cheaper than any loan I can get, and it allows me to keep as much cash free for the time being as well. I don't plan to use more than 30% of my available limits, as I'm probably only going to spend about $15k on this project.

My credit is currently in the mid 700s , and I track it weekly, so I know I will take a slight hit while the balances are on the cards, but I will pay them off before I need any other type of financing for another house.

Just wondering if anyone else would do this, even though tk a lot of people credit cards are almost taboo these days.

I always get super nervous when I hear about someone trying to finangle their way into a cheap loan via balance transfers, temporary 0% interest offers, etc.

The bottom line is this: credit card companies are out to make money.  They are sophisticated and have very large teams of people with very fancy degrees who study credit card spending behavior and patterns.  They would not have this sort of program unless they believed that it increased their overall bottom line.

Sure, some people can responsibly maintain balance transfers and always pay their debt before interest starts to accrue.  But life doesn't always run smoothly and it only takes one slip up to turn your 0% "loan" into 35% revolving debt.

If you honestly believe you have the discipline/intelligence necessary to maintain the balancing act, then more power to you, but why take this risk when alternative financing sources are so cheap these days?  For a 15k loan that you plan to pay off within 15 months, I can't imagine that you'd pay more than a couple hundred dollars in total interest.

@Jacob Edmond  I am doing the same thing currently. I opened a 0% for 15 month credit card to finance a remodel of one of my units. I have the cash to pay for it but I decided it would be better to keep that in case of an emergency. I will be making monthly payments large enough to pay off the card in 15 months and then close it.  As @Frank Jiang mentioned just be certain to make at least the minimum monthly payments or it will not be worth it. 

Good luck with the remodel!

Thanks everyone, I appreciate all of the input. I have used 0% balance transfers and introductory periods a few times already to pay off some small student loans and things already. I normally use my cards each a few times a month and payoff the balance every month. I never want to pay interest on a credit card, and so far the only interest I've paid in the last 6 or so yesrs has been the 3% or less transfer fees. I've worked hard to get my credit where it is and plan to maintain it. 

what are some of the credit cards that offer 0 percent? 

Originally posted by @Jacob Edmond :
Just wondering if anyone else would do this, even though tk a lot of people credit cards are almost taboo these days.

Nothing wrong with your strategy, but you need to stay on top of the balances to ensure you don't pay interest. Some cards start charging you interest, if you're late with a payment, even by a day. 

I do a variation of this - I pay everything (personal and business) with my cash rewards credit cards and pay them off at the end of the month. I pay no interest and get around $300 a month back in cash. 

-Christopher

Christopher Brainard, Real Estate Agent in NV (#177490)

@Jacob Edmond if you have the discipline to pay monthly minimums and a plan to pay if off in the 15-18 month period you will be fine. Realize it is not truly 0% you are usually paying a 3-5% balance transfer fee.

We have done it before :) If your active duty the credit cards offer some fantastic rewards off of their programs. Our one card is 0% always for as long as my husband is in the service. It is absolutly awesome.

I have used 0% cards and while it was nice having a 0% loan, the hit my credit took was much more than I expected. Had 800+ and took over a 100pt fall much attributed to the 0% cards as not only does the new credit line lower your age of accounts, when you run them up to take full advantage of the no interest credit line your utilization on that card takes a big chunk off your score when you go over 60%. Of course this will recover when you pay the balance off and the added credit could help you in the long run. 

Originally posted by @George P. :

what are some of the credit cards that offer 0 percent? 

 Most any of them do, it is based on your credit though. I have had good experiences with discover, chase, and barclaycard so far, and they all started with 0% interest periods, and have offered me 0% balance transfers after having them for awhile again as well. I only go for cards with no annual fee, they have to offer Cashback rewards, usually with revolving 5% categories, and then it's just best terms available. I just got one that has a 0% intro rate for 15 months, and then 10% after that.

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