1. Open a Card with a 0% Promotional APR Hundreds of credit cards are available to consumers today, and if you’re in the market, you likely have more options than ever before. This competition among issuers for your business means they must sweeten the pot if they’re going to get you to apply.
One way they do this is through signup bonuses and promotional offers. One such offer is an extended interest-free period for new cardholders. Some cards offer six months of purchases with a 0% APR and others will extend the promotional period as long as 18 months.
These cards provide a great way to make a large purchase that you’ll need time to pay off because you’ll only owe what you charge to your card — with no extra fees that make it harder to pay off.
Many rewards credit cards also feature extended promotional APR periods — meaning you can still earn rewards while you avoid accruing interest charges on your balance. Our top cards with a 0% APR introductory period offer the best of both worlds.
Before you go on an interest-free shopping spree, be sure to fully read and understand your credit card’s rules surrounding the introductory period. Some card issuers start charging interest based on your card’s balance on the day your introductory period ends.
Others charge interest on the total amount of money you charged during the period — and continue to charge it until you pay your card’s balance in full. Either option can quickly weigh down your wallet, so be sure you pay your balance in full before your introductory period ends.
Otherwise, you’ll negate the interest-free savings by paying hefty fees further down the road.
2. Transfer Your High-Interest Debt to a 0% Card If you’re carrying debt on a credit card from month to month, you’ve likely seen those interest charges eat away at your monthly payments — continuing a vicious cycle of never-ending payments that’s hard to break.
But a good balance transfer card can remove the burden of high-interest debt for a period of time. This gives you an opportunity to chip away at your principal and not spin your tires in an interest mud puddle.
Many credit cards today offer introductory offers that provide 0% interest on balance transfers for between six and 18 months. You typically have to initiate the balance transfer within a certain time frame — typically within three months of opening your card — to take advantage of the offer.
These offers can provide a tremendous amount of relief, as your total monthly payment will be dedicated to eliminating your balance, not interest charges. You’ll no longer see those depressing interest fees hit your statement each month, but you may be subject to a balance transfer fee of between 3% and 5% of the transferred balance.
Our top balance transfer credit cards give you extended repayment periods and flexible terms for any balance transfer you initiate.
While you won’t earn cash back, points, miles, or other rewards on balance transfers, you could reap a far greater benefit — less debt. Just make sure you pay off your transferred balance before the interest-free period ends. Otherwise, you’ll just shift debt from one card to the other.
Another common pitfall that consumers fall into is charging new debt to the card you pay off using the balance transfer. Once you’ve cleared the high-interest card, you should put that card away and use it only in case of emergency, or cancel the card altogether if it makes sense to do so.
3. Pay Your Balance within the Grace Period Contrary to popular belief, credit card issuers don’t start charging you interest as soon as you use your card to make a purchase. In fact, they’re legally bound to withhold interest charges for several days after you complete your purchase.
Under the Federal Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (or the CARD Act of 2009), you have at least 21 days to pay your bill without incurring finance charges, known as the grace period.
Every credit card issuer must deliver your bill to you — whether by mail or electronically — at least 21 days before your next payment is due. Under your grace period, you have at least 21 days from the time you receive your bill to pay off the new balance.
If you do so, you’ll never pay a finance charge. You can find the details of your credit card grace period in your billing statement.
Starting on day 22, though, your issuing bank can — and will — start applying interest charges to your balance. That’s why it’s important to never charge a purchase to your credit card you can’t afford to pay off within three weeks. This will save you the money you’d otherwise pay to the issuing bank in interest.
Even if you cannot pay the entire balance within 21 days, you should always try to make some sort of payment within that time frame. Once a purchase enters day 22 on your card, you’ll start accruing finance charges on that current balance. The lower your balance, the lower the interest charges.
Best of all, you’ll continue to earn rewards from your credit card. One reason rewards cards have high APRs is to offset the cost of the rewards the issuing banks dole out every day. So, when you’re not paying interest, you’re not paying for your rewards.