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- My wife and I have been debt-free for years, but that doesn’t mean we don’t use credit cards.
- We love using 0% APR credit cards strategically, making big purchases and paying them off over time.
- We never pay an interest charge and are able to keep our savings on hand.
I’ve been a long-time credit card user. I know that makes Dave Ramsey fans gasp in horror. I know because I once was a huge Ramsey fan. His guidance is one of the ways that we paid off our mortgage 16 years early.
However, I have always been a huge fan of using credit cards to my advantage. At the age of 18, I got my first credit card, a Chase Freedom credit card. There was one caveat that my dad pounded into me. Even though my dad is gone, I still hear his voice telling me, “You can use a credit card. However, you need to make sure you pay off the balance every month, so you don’t incur an interest charge.”
For the last 22 years, I’ve heard his advice — except when using credit cards with an introductory 0% interest rate. I’ve used these cards to keep money in the bank while purchasing big-ticket items.
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What is a 0% APR credit card?
After the introductory period, all credit cards charge an interest rate. These rates can be excessive and hold the user in debt bondage. Tea average credit card has an interest rate of 18.43%.
With the way the economy is and the Fed raising interest rates, this average could soon soar higher. If APRs go higher, using your credit card could become even more expensive.
I like to find credit cards that offer an introductory 0% APR on purchases. What this means is that you can make credit card purchases without the high interest rates as long as you make the minimum payment each month and pay off your entire balance before the introductory period is over.
I’ve used multiple credit cards to do this. Finding 0% APRs is a fun game I’ve played when making big purchases.
3 ways I’ve used 0% APR credit cards
I’ve used 0% APR credit cards to my advantage in three ways. They’ve helped me keep money in the bank while purchasing the items I wanted. During this time, I could use the money I didn’t have to spend on the purchases to make wise investments that returned profits. It’s a win-win if done right.
When purchasing big-ticket items
We’ve had to make a few big-ticket purchases since we moved into our home over 17 years ago, mainly appliances. I’m talking washers, dryers, and, more recently, a full kitchen suite of appliances: dishwasher, refrigerator, stove, and microwave.
The kitchen appliances were in the thousands of dollars range. We could have paid for this out of our savings, but I wanted to keep that money safe. When we went to Home Depot, I looked at opening a line of credit with the store. Home Depot has its own store-branded credit card, and it regularly offers six, 12, 18, or 24 months of no interest.
Our purchase qualified for 24 months with no interest. The introductory 0% APR meant we could make payments over 24 months with no interest.
I applied and was approved for the credit card. I then figured out how much we would need to pay monthly to have the appliances paid off before interest would be charged. I set up automatic payments to ensure everything would be paid off within 24 months.
When money is tight
Money wasn’t always as free-flowing as it is now for us. My wife and I had the goal of paying off our home and pushed hard for that goal. We put every extra penny toward our house payments.
Our desire to be debt-free meant cash was tight. So what did we do? We looked at 0% APR credit cards.
We found credit cards that allowed us to make purchases without paying interest. These credit cards allowed us to fund our lifestyle while still living frugally.
We knew what we could spend, when we could spend it, and what needed to be paid. If a 0% APR credit card didn’t need the maximum amount paid, we could shift some of those payments to another credit card.
Moving payments is a bit of a shell game, but with the proper discipline, it can work out.
When there are great rewards
Credit cards always offer great rewards for signing up for a new card. I love getting extra points, travel benefits, or even cash back.
Sometimes, these rewards require doing a balance transfer. Since we don’t carry balances, traditionally, this meant opening a credit card, moving our total balance over, and then slowly paying down the 0% APR credit card.
The rewards were more than worth it. We could travel, enjoy extra cash, and find rewards that fit our lifestyles.