Zero percent credit cards are undoubtedly valuable. In fact, “a 0% loan that can be paid off in monthly installments of 1-3% of the principal balance is a pretty good deal, perhaps the best borrowing one could engage, assuming future income remains stable,” according to Jason Kilborn, a professor at The John Marshall Law School who studies bankruptcy and insolvency.
But in order to truly take advantage of a 0% APR credit card offer, you must have a plan from the start. A 0% credit card isn’t simply an invitation to spend freely and worry about paying later, after all, as the 0% APR introductory period will end and the regular rate will kick in. Ideally, you should be getting a 0% card with a specific big-ticket purchase in mind or to pay for some unexpected expenses. That way you can use a credit card payoff calculator
to determine the monthly payments required to pay down your balance before the conclusion of the 0% intro period.
“Zero percent credit cards are obviously a great financing option compared to other forms of short term credit that charge market rate interest such as other revolving credit cards, overdraft protection and payday loans. And since the CARD Act was implemented, they are even better,” says David Reiss, founding director of the Community Development Clinic at Brooklyn Law School. Prior to the CARD Act, credit card companies might solicit new business with a zero percent interest rate and then jack it up for sometimes legitimate reasons (for example, default on the credit card debt) but often for illegitimate reasons (for example, alleged default on another, unrelated debt). So, if you are confident you can avoid default (which may trigger all sorts of bad financial outcomes), this option is worth considering. … Ideally, you will pay back the debt before the zero percent rate expires, but if you do not plan to, you should compare the interest rate of your current credit card with that of the one with the promotional rate to at least get a sense of the difference in the rate you would be paying after the promotional period expires."
If you don’t have a good reason to need a 0% APR credit card, then your motive in opening one comes into question. You shouldn’t need a 0% card to escape interest on everyday expenses because if you are truly living within your means, you should be able to pay for them in full every month. A spending adjustment is in order if you can’t, not a new credit card. Many consumers would do well to heed such advice, as "consumer debt is clearly a big issue that is likely to only get bigger," according to Dr. Matthew Ragas, a professor at DePaul University.
Some people also use 0% credit cards in order to put the money they would have spent paying off their bills into savings accounts and thereby garner interest revenue. Doing so is fine, but be careful because it takes a tremendous amount of discipline not to overextend yourself using this strategy and you’ll be forgoing the ability to maximize your rewards (0% credit cards typically have low rewards structures, if any rewards at all).