4 Tips For Choosing The Best 0 % Interest Credit Card. — SHE-WISE (2024)

The way I see it, a credit card that offers 0% interest for a particular amount of time is not for the purpose of having more time to pay off new purchases.

Its purposeis to help you get ahead with things you've already bought and have yet to pay off.

AKA, your debt.

Truth be told, I was very cautious about using a credit card like this. But my desire to get ahead with my finances won and so I began my search of the card that was best for me.

I can now tell you that using a credit card with no interest to pay off debt is an excellent way to get ahead and one that I’ve been applying to my own money with great results.

In fact, it was in this way that I was able to pay off $7,000 in 7 months. This was after it took 24 months to pay off the first $3,000 on the same loan.

In order for a card like this to benefit you, you need to know how to use it effectively.

Like anything, these no-interest offers come with an incentive for both parties involved.

The credit card companies make money in two ways.

1. They make money from the balance transfer fee that you pay.

2. They will potentially make money from the interest accrued if you still have a balance after the time given at 0% interest.

Like them, your incentive is strong as well.

If you are willing to spend the time it takes to know exactly how much you plan to pay off and the most cost-effective way to do so, you will start to see your numbers move in all the directions you want them to with the help of one of these cards.

The first step is choosing the right card for you.

When I chose the card I wanted to apply for I broke it down by how much I wanted to transfer combined with what I could afford to pay every month, the amount of time I would be given with no interest fees, exactly how much I would be paying in fees, and the rate of interest at the end of my time if I wasn't able to pay my balance in full.

To help make this more clear, here are the four factors I applied with examples.

1. How much debt do you plan on transferring & how much of it you can afford to pay each month?

For this post, we will assume we are transferring a total of $7,000 and your monthly budget to put toward these payments is $550.

2. How many months have no interest?

You will likely see two options for length of time at 0% interest for these cards. Typically 12 to 18 months.

Let’s assume you are considering two different cards. One offers 12 months of 0% interest and the other offers this for 18 months.

How much would the monthly payment be for the 12 month card?

$7,000/12= $583

And the 18 month card?

3. How much will it cost you to transfer your balance based on the transfer fee? (Include annual fee here if there is one & add this onto your monthly payment).

In our example, the card with 12 months offers a balance transfer fee of 4%:

So, $7,000 x .04%= $280

You will add this amount to your total balance in order to recalculate your monthly payment.

$7,000+ $280= $7,280 total

$7,280/12= $606.67 monthly

Next, the card offering 18 months at 0% interest has a one time fee of $350 for balance transfers.

Adding this to your balance of $7,000 you now have $7,350.

Perhaps you want to push your monthly budget up closer to $600 in order to pay less in transfer costs and have this paid off faster.

Alternatively, giving yourself a few extra months to pay this may be your best option.

Keep in mind, there is still more to consider.

4. What will your interest rate be after the allotted time ends, if you aren't able to pay off your balance in full?

The card offering 12 months has an APR (annual percentage rate) after the year at 23% and the card offering 18 months has an APR of 18%.

If you have a balance of $1,000 remaining on your card you will have the following charges:

12 month card: $1,000 x 23% = $230

This means you now have a remaining balance of $1,230.

18 month card: $1,000 x 18% = $180

This gives you a total remaining balance of $1,180.

Still with me? Good! Because you’ve made it through.

With this information, you are now able to choose your card based on the length of time at 0% interest combined with the lowest transfer fee that works best for you.

No one can make this decision for you and a lot of what you learn will come during the journey.

You never know how life will unfold for you during this time and in my experience, it's best to allow some wiggle room.

It's important to consider the possibility of needing to decrease the amount you are able to afford monthly. If this happens, the APR will play a bigger role for you.

Another important consideration is if you will be using this card to pay off other debts in the future.

If so: What do those balances look like?

How would the transfer fees affect the total?

Use what you’ve learned here & apply it as well as you can to your current situation.

Do your best to consider all factors without stressing about the future.

And keep in mind that your best approach is to simply be honest with yourself about your money habits and which card to choose with those in mind.

How we do one thing is how we do everything.