Using a 0% APR Credit Card? 5 Things Not to Do

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A 0% APR credit card could help you spend less on credit card interest, but it’s important to use these cards with care. Find out what mistakes to avoid. 

The great thing about 0% APR credit cards is they can save you money on interest charges. Some consumers use these credit cards to finance a costly purchase and to have more time to pay down their debt without paying interest. Other consumers use balance transfer credit cards to transfer debt and avoid additional interest charges while they pay off outstanding credit card debt. Whatever your reason for using them, here are some mistakes to avoid when using 0% APR credit cards.

1. Not paying off your balance before the 0% APR period ends

Many of the best 0% APR credit cards offer 0% APR for 15 months or more. Paying off your card balance before the promotional period ends is ideal. Otherwise, you’ll be charged interest on the remaining balance. If you want to avoid paying extra fees, pay off your balance before the no-interest period ends.

2. Not paying attention to the 0% APR promotional timeline

Credit cards with 0% APR can offer savings, but reviewing the no-interest promotional timeline is essential. You won’t be able to take advantage of 0% interest forever. Instead, the offer is available for a fixed period. After the promotional period ends, you should expect credit card interest charges to apply if you carry a balance on your card. Don’t ignore this important detail.

3. Taking on new debt before paying off existing debt

If you’re using a 0% APR credit card to finance a costly purchase or an emergency expense, paying down your debt before using the card for additional purchases is best. You don’t want to risk accumulating expensive credit card debt, which could harm your personal finances.

Allowing your credit card balance to climb will make it harder to pay down the debt during the 0% interest period. Credit card debt can be an expensive problem to crawl out of, so it’s beneficial to focus on paying off your balance before taking on new debt.

4. Forgetting to make a payment or making a late payment

Mistakes happen, but some mistakes are costly. If you have a 0% APR credit card and forget to make a payment or pay after the due date, your credit card issuer may revoke the 0% APR offer. If that happens, interest will be charged. It’s also likely that you’ll be charged a late fee.

By paying your bills on time each month, you can avoid this. Keep in mind that paying all your bills on time is also a good move for your credit score. Your payment history, which includes whether you pay your bills on time, makes up 35% of your FICO® Score.

5. Choosing the wrong no-interest card for your needs

Some credit cards advertise 0% APR for purchases, while others advertise no-interest for balance transfers. Understanding these differences is crucial to choosing the right credit card for your goals. Here’s a breakdown of each card option:

If you want to use your card to make interest-free purchases, you’ll want to look for a card with a 0% APR offer on purchases.If you plan to transfer existing credit card debt, a balance transfer credit card can give you more time to pay off the debt without paying additional interest. If you make new purchases with a balance transfer card, you may be charged interest.

Make sure you understand the differences between these cards and choose the right one to avoid surprise interest charges. It’s also important to be aware that most balance transfers credit cards charge a balance transfer fee of 3% to 5% of the total transferred balance.

Use credit cards to your advantage

When used with care, credit cards can provide many benefits. You can use credit cards to your advantage by enjoying the benefits and making smart purchase and payment decisions to increase your credit score.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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