How to use an interest-free credit card to save while on vacation

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The holidays are fast approaching and consumers are expected to shell out $ 1,463 per household in gifts this year, according to Deloitte Holiday Retail Survey, up 5% from last year.

It’s not a small piece of change, and you might be wondering how you’re going to pay for all of those freebies without racking up a bunch of credit card debt. More and more people are turning to “buy now, pay later” (BNPL) loans to spread the cost of gifts over a few months. However, BNPL lacks many of the benefits and consumer protections that credit cards offer, so you will definitely want to read the fine print before signing up.

If you want even more time to pay for your holiday shopping (we’re talking almost two years) along with added benefits and consumer protection, you should consider opening a 0% APR credit card.

This type of card will give you spending flexibility, the ability to earn rewards, and if you set up a repayment plan, you won’t have to pay credit card interest. Here’s what you need to know:

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How to use an introductory 0% APR credit card during the holiday season

A The 0% APR credit card offers consumers a designated interest-free period (typically six to 21 months) on qualifying purchases and / or balance transfers. This gives consumers the ability to avoid paying exorbitant interest rates on their balances, without giving up the spending flexibility and many benefits of a credit card. And during times of big spending (like vacations), they can be a great way to spread big expenses over a long period of time.

Let’s say you plan to spend $ 1,500 this holiday season. If you were to put these purchases on a credit card with an APR of 15.99% and just made the minimum payment each month (say it’s $ 40), it would take you 53 months to pay off the card. and you would spend almost $ 600 in interest.

However, with the right 0% APR card, you can avoid interest and earn cash rewards. For example, if you spend the same amount of $ 1,500 for the Wells Fargo Active Cash Card℠, which offers an introductory 15-month 0% APR on new purchases (the variable APR will be 14.99% to 24.99% after that), you can also earn 2% cash rewards on all eligible purchases.

With 0% APR cards, you will always have to pay at least the minimum each month. And to get the most out of the card, it’s best to set up a payment plan so that you can pay off the balance before the introductory period ends. With the Wells Fargo Active Cash card, you will want to pay at least $ 100 per month over the 15 month period to avoid interest charges.

The cards below all offer an introductory 0% APR, along with a list of other perks.

Citi Custom Cash Card℠

  • Awards

    5% cash back on purchases in the best eligible expense categories each billing cycle, up to the first $ 500 (then 1%); 1% unlimited cash back on all other purchases

  • Welcome bonus

    Earn $ 200 cash back after spending $ 750 on purchases in the first 3 months after opening the account. The bonus offer will be filled as 20,000 Thanks® Points, which can be redeemed for $ 200 cash back.

  • Annual subscription

  • Introduction APR

    0% APR on balance transfers and purchases for the first 15 months

  • Regular APR

    13.99% to 23.99% variable

  • Balance transfer fee

    5% of each balance transfer ($ 5 minimum)

  • Foreign transaction fees

  • Credit needed

Chase Freedom Unlimited®

  • Awards

    Earn 5% cash back on grocery store purchases (excluding Target® or Walmart® purchases) up to $ 12,000 spent in the first year, 5% cash back on trips purchased through Chase Ultimate Rewards®, 3% on pharmacy and meal purchases (including eligible takeout and delivery services) and 1.5% cash back on all other purchases

  • Welcome bonus

    $ 200 cash back after spending $ 500 on purchases in the first 3 months after opening the account

  • Annual subscription

  • Introduction APR

    0% the first 15 months from the opening of the account on purchases

  • Regular APR

    14.99% to 24.74% variable on purchases and balance transfers

  • Balance transfer fee

    Either $ 5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fees

    3% of each transaction in US dollars

  • Credit needed

American Express Blue Cash Everyday® Card

On the secure American Express site

  • Awards

    3% cash back at U.S. supermarkets (up to $ 6,000 per year in purchases, then 1%), 2% cash back at U.S. gas stations and some U.S. department stores, 1% on other purchases. Cash back is received in the form of reward dollars which can be easily redeemed for statement credits.

  • Welcome bonus

    Get a $ 200 credit on your statement after spending $ 2,000 on purchases with your new card in the first 6 months.

  • Annual subscription

  • Introduction APR

    0% for the first 15 months on purchases, N / A for balance transfers

  • Regular APR

    13.99% to 23.99% variable

  • Balance transfer fee

  • Foreign transaction fees

  • Credit needed

What to keep in mind when choosing a 0% APR credit card

All 0% introductory APR credit cards have the same major benefit – giving cardholders the ability to avoid interest charges for a specified period of time. However, not all of these cards are created equal. Keep these points in mind when choosing a 0% APR credit card:

Cash back or travel rewards

Not all 0% APR cards offer a rewards program, although many do. Determine if the length of the introductory offer is more important to you or if you want to earn cash rewards. For example, you can get 2% cash rewards on all qualifying purchases with the Wells Fargo Active Cash Card℠. But if the rewards aren’t important to you, the Citi Simplicity® Card offers 12 months of financing without interest on purchases from the date of opening the account and on balance transfers for 21 months from the date of the first transfer (14.74% to 24.74% variable after; balance transfers must be made within the first four months)).

Duration of the 0% introductory period

Each card offers a different duration for the APR launch period, which typically ranges from six to 21 months. It is wise to assess how quickly you will be able to pay off your balance. If you are unable to pay off your credit card balance by the end of the APR introductory period, the card will revert to its normal interest rates.

Consumer protection

If you’re making vacation purchases with this card, you’ll definitely want one that offers some consumer protections. With the Chase Freedom Unlimited®, you’ll get purchase protection and extended warranty protection, which insures purchases made with the card against theft, damage, or defective products. While there are some restrictions for these covers, they do not require any additional work on your part. Simply swipe with the corresponding card and your purchases are protected. The Freedom Unlimited card offers an introductory 0% APR for 15 months on purchases and balance transfers (APR varies from 14.99% to 24.74% thereafter).

Your credit rating

You usually need a good or excellent credit score to be approved for a 0% introductory APR credit card. Credit card issuers have strict requirements for these cards because they want to be sure that you will pay off your balance in full, so that they don’t end up with a potentially high balance card with no payment. Additionally, these types of offers are seen as a reward for keeping your credit score high, as cards aimed at consumers with less than perfect credit do not come with these types of promotions.

At the end of the line

An introductory 0% APR is a simple way to finance your vacation purchases over an extended period of time without paying high interest charges. Plus, some of the best cards also offer generous welcome bonuses, strong consumer protections, and strong rewards programs, making these 0% APR credit cards great value for consumers.

However, before you start your holiday shopping this year, be sure to budget yourself to make sure you don’t start the new year with more debt than you expected. A credit card is a great financial tool if you use it wisely and take steps to avoid taking on more debt.

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To find out the rates and charges for Blue Cash Everyday, click on here.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.



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