When you have a credit card with a 0% introductory APR offer, you may be tempted to spend just a little more than you can afford to pay off each month. After all, you likely have six to 18 months before you accrue interest, and you’d rather defer the issue to Future You. Well, Present You, that may not be the best plan. Let’s discuss 0% APR offers and their inevitable expiration.
0% introductory APR offers aren’t forever
There are a ton of great credit card perks, but the Nerds have yet to find a card that offers 0% interest forever — and we have a database of over 1,200 cards! Credit cards with introductory APR offers generally allow you to make purchases at 0% interest for six to 18 months. And while that may seem like a long time, it tends to sneak up on you.
A 0% introductory rate isn’t license for you to spend above your means for five to 17 months and then scramble to pay off the balance in the last month. This puts unnecessary pressure on you and could backfire if you can’t come up with the money when it comes due. Instead, if you want to take advantage of 0% financing for a large purchase, have a plan in place to pay off the balance in full well before it’s due. And don’t forget, 0% interest rate or not, you still need to make the minimum payment each month.
Keep track of when your introductory rate will expire
The Credit Card Act of 2009 requires issuers to let you know when your interest rate goes up. However, this doesn’t apply to an introductory rate, provided the issuer made the time period and the regular APR clear when you received the card. You should be able to find this information on your credit card term materials.
If you’re currently in the mid-introductory period, and you’re not sure when the 0% rate expires, check your current credit card statement. If you can’t find it on your statement, call your issuer to confirm the date your introductory rate expires and make sure you pay the card off entirely before that date.
Holiday shopping is on the horizon — danger, Will Robinson!
Even the most savvy and responsible spenders can go a little crazy when buying gifts for their loved ones — especially when holiday cheer (and eggnog) are thrown into the mix. To avoid this, make a list, with prices, of what you want to buy for your family members and friends. Your list should reasonably represent an amount you can afford to pay off. Don’t pay interest on gifts — if you can’t afford them, you need to downsize your items. Your loved ones don’t want you to go into debt for them, and they’ll understand if the gifts are cheaper this year.
Bottom line: If the Nerds ever hear about a credit card that offers a lifetime of 0% interest, we’ll be sure to let you know. Until then, understand that introductory rates don’t last forever. Like a summer fling, enjoy it while you have it and prepare for the day when you don’t. Know when your rate expires and take special care to avoid spending like Santa this holiday season.
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