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Job on the Way: Time to Grab a 0% Credit Card?

Sept. 5, 2014
Credit Cards
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For those who use it properly, especially those who are about to start a new job, there are few deals better than the 0% credit card. With a job on the way, it’s time to grab that 0% credit card because it not only offers you maximum purchasing flexibility, it may also allow you to rejigger your cash flow to your favor.

Life is now easier

If you are about to start a new job, it means you are going to have more cash coming in. Those periods between jobs are psychologically taxing and can really create havoc with your bank account and savings goals.

As you bleed cash to pay fixed costs to run your household, stress can mount as your bank balance gets smaller and smaller.

However, the moment you have a 0% credit card available, especially one that offers that rate for 15 or 18 months, you can breathe a big sigh of relief on the cash-flow front.

Balance transfer may make sense

If you are approved, and you happen to be carrying other balances on credit cards with higher interest rates, you should strongly consider doing transferring those balances to a 0% card.

While it will cost you a fee — around 3% — it will likely save you a lot more money by moving to the 0% rate.

If you are carrying $20,000 of credit card debt at 15%, you are paying $3,000 a year in interest for the privilege of not having to pay off that 20 grand.

For a fee of around $600 for a balance transfer, you can now pay that $20,000 balance off at $1,111 a month (if its an 18-month deal) or $1,333 a month (on a 15-month deal). You’ll hopefully be able to make these payments using your new salary.

Cash-flow problem solved

Maybe you don’t have a credit card balance, but instead are bleeding cash. Perhaps you’ve paid out $20,000 from your bank account during your unemployment.

By charging everything you possibly can on the 0% card, you can make the minimum payment on the card each month, which will be negligible, and plow your new salary money back into your bank account.

You will hopefully have replenished that $20,000 – and more – over the length of the 0% deal period.

Cash back can help even more

If you pick the right card, you can even augment your cash position, by choosing a cash-back card.

In effect, some of these cards will cut you a check for 1% or more of what you charge.

Others will apply it to your monthly statement, although — since you don’t have to pay more than the minimum during the 0% rate — you can save all those rewards up until the end of the trial period and then apply them.

A caveat to consider

One important note about 0% introductory rate cards. Be sure to ask about, and then confirm, the date at which the entire balance must be paid before the regular APR rate kicks in.

You don’t want to build up that huge balance and then get dinged with the very APR you were trying to avoid.

Elated man image via Shutterstock