How to make the most of a 0% APR during the holiday shopping season

Whether you sign up for a new credit card with a 0% APR on purchases, a 0% APR on balance transfers, or both, utilizing the 0% percent interest rate can be advantageous to your holiday shopping. Here’s how to get maximum value on a 0% credit card this holiday season.

1. Set your spending limit

A credit card issuer may give you a generous credit line on a credit card with a 0% rate on new purchases. But that is not a signal to charge all the way to the card’s limit on holiday purchases. Ideally, you’ll want to only charge what you can comfortably pay off during the card’s 0% introductory period, which could be as long as one year to 18 months. So add up your holiday spending and divide it by the number of months in the 0% offer. Will you comfortably pay off the total amount before the 0% offer ends? If not, you may wish to charge a lower amount on your card.

2. Transfer balances

If you have racked up a high-interest credit card balance already, you may wish to give yourself more breathing room on your payments by transferring a balance to a card with a 0% rate on balance transfers. The best balance transfer credit cards offer 0% interest for as long as 18 months. But watch out for fees. Some issuers charge balance transfer fees ranging from 2% to 5%. Once you select a balance transfer offer, you’ll want to do everything you can to pay off the amount you transfer during the card’s 0% introductory period. Getting 0% on a credit card is an excellent opportunity to pay down your debt without paying a penny of interest charges. So make the most of it. And you don’t need to transfer a large balance. Even a few hundred dollars in holiday spending could be transferred to a new card with a 0% interest rate for a year or longer.

3. Charge and transfer at 0%

Some cards offer 0% introductory rates on balance transfers and new purchases. With such an offer, you could enjoy 0% interest on holiday charges and transfer a balance from a high-interest credit card. Both are good deals. Just be sure to only charge what you can pay off during the introductory period for purchases; the same goes for any balance transfers. You don’t want to overdo this good opportunity.

4. Know your payment due date

If you pay late on a credit card with a 0% introductory rate, you may lose the 0% rate. Don’t let a great offer slip away. Pay your credit card on time every month and keep that 0% offer intact. If the due date is at a time of the month when money is tight, ask your card issuer to move it to a better date, such as a couple of days after your payday.

5. Automate payments

Automating payments is one way to avoid owing interest on a 0% credit card. First, determine how much you will need to pay each month of the introductory period, then set that amount for your automated payment. If your cash flow is more sporadic, set the minimum due as your automated amount and make additional payments as more money enters your account.

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Prices were accurate at the time this article was published but may change over time.