Carrying a Balance? How to Save Money on Interest With 0% APR Offers

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Update:   One or more card offers in this post are no longer available.  Check our Hot Deals for the latest offers. 

Million Mile Secrets reader Zack comments:

I need a couple of 0% APR on purchases cards.  Could you tell me what the best ones with a good sign-up bonus are?  Regardless of if they have an annual fee or not.

I have signed-up for a lot of the offers you have posted over the last year and a half, and paid them in full.  But I am doing some work on my house and I would like to get 1 or 2 cards to use for daily purchases, and carry a balance at 0% interest for about a year, so I can use my cash toward my house for a little while.

So far I have found the Capital One Venture One rewards card that gives a $200 bonus, no annual fee, and 0% APR for 12 months.  Do you have any other suggestions?

I’ve written that you shouldn’t apply for credit cards if you can’t pay them off in full each month.  That’s because the miles and points you earn are usually not worth the interest you get charged.

But sometimes, due to unexpected expenses, job loss, or illness, folks might have to carry a balance on their cards.  So how can you minimize the amount of interest you’ll pay?

Carrying A Balance How To Save Money On Interest With 0 APR Offers

If You’re Carrying Balances, Are There Ways to Avoid Paying High Interest?

You could pay NO interest by making the most of 0% APR credit card offers for purchases.  And folks who are carrying balances on other cards could save money by transferring the balance to a card with a 0% APR balance transfer promotion.  I’ll explain.

How Do 0% APR Offers Work?

Link:   Hot Deals

Link:   Credit Card Payment Calculator

Depending on the credit card and your credit score, you’ll usually be charged anywhere from ~9% to ~26% interest if you carry a balance.  That can add up very quickly!

Carrying A Balance How To Save Money On Interest With 0 APR Offers

Some Cards Charge Over 25% Interest on Balances! That’s NOT Small Money!

Even folks with good credit sometimes need to carry a balance.  By signing-up for cards with promotional 0% APR offers on purchases and balance transfers, you can avoid paying interest for months or sometimes over a year.

So if you know you have a big expense coming up that you’ll need to pay for over time, it’s a good idea to use a card with an introductory 0% APR on purchases.  Be sure to pay it off in the time frame required before the higher interest rate kicks in!

Even if you’re an existing cardholder, some cards run promotions periodically by sending folks balance transfer checks, often with a 0% APR for a year or more.

But for balance transfers, you’ll almost always pay a fee, usually 2% to 5% of the amount transferred.  So this is NOT generally a way to avoid paying ANY fees or interest altogether.

That said, paying a balance transfer fee can be a much better deal than carrying a high balance and paying 20% interest or more!

Example:  $5,000 Balance Transfer

Suppose you have a $5,000 balance on a high-interest rate credit card (23% APR) and aren’t able to pay it off right away, but can make payments of $400 per month.

If you run the numbers through a credit card payment calculator, you’ll see that it would take 15 months to pay off the $5,000 balance.  But you’d pay ~$772 in interest!

Carrying A Balance How To Save Money On Interest With 0 APR Offers

You’ll Pay ~$771 in Interest on a $5,000 Balance If You Pay $400 per Month for 15 Months

If you transferred the $5,000 balance to a card with a promotional 0% APR offer, you’d save money, even with the fees!

Note:  You’re still responsible for making at least the minimum payment each month.

For example, the Chase Freedom has a 0% APR on balance transfers for the 1st 15 months.  The balance transfer fee is 3%, so you’d pay $150 to transfer a $5,000 balance ($5,000 x 3%).

But as long as you’re able to make at least the minimum payment, you’ve just bought yourself 15 months of no interest!  You’d save ~$621 (~$771 interest you’d pay on a high interest card – $150 fees for balance transfer).

Note:   You usually can NOT transfer a balance from 1 card to another within the same bank (ex:  Transfer a balance from the Chase Sapphire Preferred to Chase Slate).

However, if you open a new card, you can make the balance transfer check payable to yourself and deposit it into your bank account.  Then you can use the funds to pay whomever you wish!

Here are some of my favorite credit cards that currently have 0% APR offers!

Cards With Introductory 0% APR and NO Balance Transfer Fee

1.   Chase Slate

Link:   Chase Slate

I wrote that the Chase Slate is the best card for balance transfers, because you won’t pay a fee if you transfer a balance in the 1st 60 days of having the card!

The 0% APR is valid for purchases and balance transfers for the 1st 15 months.

Carrying A Balance How To Save Money On Interest With 0 APR Offers

Keep Your Money! You Won’t Pay Fees to Transfer a Balance in the 1st 60 Days of Having the Chase Slate Card

You won’t earn points or cash back with this card, and there’s no sign-up bonus.

But if you need to transfer a high-interest balance, you’ll save money.  Plus, there’s no annual fee, so this could be a good card to keep for a long time to improve the length of your credit history.

Cards With Introductory 0% APR and a Balance Transfer Fee

1.   Chase Freedom

Link:   Chase Freedom

The Chase Freedom has a 0% APR on purchases and balance transfers for the 1st 15 months.  You’ll pay a fee of $5 or 3%, whichever is greater, to transfer a balance.

This is 1 of my favorite cards because it has no annual fee and earns 5X points or 5% cash back in quarterly rotating categories (like gas stations, restaurants, or Amazon).

For a limited time, the sign-up bonus is 20,000 Chase Ultimate Rewards points or $200 cash back after you spend $500 in the 1st 3 months.

And you’ll get another 2,500 points ($25) if you add an authorized user who makes a purchase in the 1st 3 months.

Plus, if you also have a Chase Sapphire Preferred, Chase Ink Plus, or Chase Ink Bold (no longer available) card, you can transfer points earned from the Chase Freedom to airline and hotel partners.

2.   Citi ThankYou Preferred

Link:   Citi ThankYou Preferred

The Citi ThankYou Preferred has a 0% APR on purchases and balance transfers for the 1st 12 months.  The balance transfer fee is 3% or $5, whichever is greater, and you must complete the balance transfer within the 1st 4 months.

You’ll get 20,000 ThankYou points (worth $200 in gift cards) after you spend $1,500 in the 1st 3 months of having the card.  And you’ll earn 2X points on dining and entertainment.

However, if you also have the Citi ThankYou Premier, Citi Prestige, or now-discontinued Citi Chairman card, you can combine ThankYou points from the Citi ThankYou Preferred card and transfer them to airline and hotel partners!

Note:   There’s a better 30,000 offer available for this card, but it does NOT have a 0% APR on purchases and balance transfers.

3.   Citi Double Cash

Link:   Citi Double Cash

The Citi Double Cash card doesn’t have a sign-up bonus, but there’s no annual fee.  You’ll get a 0% APR on purchases and balance transfers for the 1st 15 months.

The balance transfer fee is 3% or $5, whichever is greater, and you must complete the balance transfer within the 1st 4 months.

With the Citi Double Cash card, you’ll earn 1% cash back when you make a purchase, plus another 1% back when you pay the purchase off.  There’s no limit to the amount of cash back you can earn.

Here’s my full review of the card!

4.   Barclaycard US Airways

Link:   Barclaycard US Airways

The Barclaycard US Airways card won’t be around for much longer, but while it is, you can get a 0% APR for 15 months on balance transfers only (NOT purchases) made in the 1st 45 days of having the card.

This card wouldn’t be good for Zack (because it doesn’t have a 0% APR on purchases), but it might be worth it for folks carrying a balance on high-interest cards.

For a limited time, the sign-up bonus is 50,000 miles after you make your 1st purchase and pay the $89 annual fee.  That’s enough for a low level round-trip coach class ticket from the mainland US to Hawaii, with miles left over!

The balance transfer fee is $10 or 3%, whichever is greater.  And note that purchases made in the 1st 15 months are charged regular interest rates.

5.   Barclaycard Arrival Plus™ World Elite MasterCard® and Barclaycard Arrival

Link:   Barclaycard Arrival Plus™ World Elite MasterCard®

Link:   Barclaycard Arrival™ World MasterCard®

Both the Barclaycard Arrival Plus™ World Elite MasterCard® and Barclaycard Arrival card offer a 0% APR on balance transfers (NOT purchases) made within the 1st 45 days of having the card.  You’ll keep the 0% APR for 12 months.

The balance transfer fee is 3% or $5, whichever is greater.

Again, this won’t be a good deal for Zack because the 0% APR applies to balance transfers only.  But if you need to transfer a balance from a higher-rate card, it could be a good deal for you.

I don’t like the Barclaycard Arrival as much as the Barclaycard Arrival Plus, because it only earns 2X points on dining and travel (instead of 2X on everything like the Arrival Plus), and the sign-up bonus is lower (20,000 miles after spending $1,000 in the 1st 90 days, instead of 40,000 miles after spending $3,000 in the 1st 90 days).

But there’s no annual fee with the Barclaycard Arrival.  The $89 annual fee on the Barclaycard Arrival Plus is waived for the 1st year.

6.   Barclaycard Miles & More World Elite MasterCard (Lufthansa)

Link:   Barclaycard Miles & More World Elite MasterCard

The Barclaycard Miles & More World Elite MasterCard card has a sign-up bonus of 20,000 miles when you make your 1st purchase and pay the $79 annual fee.

This isn’t the best deal, because there have been limited time increased sign-up bonus of 50,000 miles after you spend $5,000 in the 1st 90 days.

You’ll get a 0% APR on balance transfers (NOT purchases) made withing the 1st 45 days of opening your account.  The balance transfer fee is $5 or 3%, whichever is greater.

Keep in mind that Barclaycard doesn’t allow folks to sign-up for more than 1 to 2 of their cards per year, so choose your Barclaycard cards wisely!

7.   American Express EveryDay and EveryDay Preferred

Link:   American Express EveryDay

Link:   American Express EveryDay Preferred

Both the American Express EveryDay and American Express EveryDay Preferred cards have a 0% APR on purchases and balance transfers for the 1st 15 months.

The balance transfer fee is $5 or 3%, whichever is greater.

The AMEX EveryDay card has no annual fee and you’ll get a 10,000 points sign-up bonus after you spend $1,000 in the 1st 3 months.

The AMEX EveryDay Preferred card has a $95 annual fee, but the sign-up bonus is 15,000 points and you’ll earn more points from bonus spending than the EveryDay card.

Both cards now come with a year of free Amazon Prime membership after you complete the minimum spending requirement.

And American Express Membership Rewards points transfer to lots of hotel and airline partners, which means you’ve got great flexibility!

A Note for Existing Cardholders Who Already Carry Balances

Keep an eye out for promotional offers sent by credit cards you already own!  Occasionally, banks will send balance transfer checks with a lower balance transfer fee than usual.

For example, I recently received an offer from Chase with a 0% APR for 14 months and a 2% balance transfer fee.

Carrying A Balance How To Save Money On Interest With 0 APR Offers

This Promotion From Chase Has a 0% APR for 14 Months and Only a 2% Balance Transfer Fee

So for a $5,000 balance transfer, you’d only pay $100 in fees ($5,000 x 2%) and get 14 months of no interest.  But you’ll still have to make at least the minimum payment.

Bottom Line

If you have to carry credit card balances, you can avoid (or delay) paying interest by taking advantage of credit card 0% APR offers on purchases and balance transfers.

You can delay paying interest on new purchases for 12 to 15 months.  And by transferring balances from high-interest credit cards to a 0% APR card, you can save a lot of money!

You’ll usually pay a fee between 2% and 5% of the balance transferred.  But that’s still better than paying interest of 20% or more!

And remember, you still have to make at least the minimum payment on the card, even though you’re not paying interest for a specified time.

Have you used 0% APR promotions to avoid paying interest?  Please share your experiences in the comments!

Thanks for the question, Zack!

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7 responses to “Carrying a Balance? How to Save Money on Interest With 0% APR Offers

  1. In 2011, I paid off a very high student loan in my home country using this technique and saved like 2000$.

  2. Do you earn points when you transfer a balance?

  3. Definitely have used this method, especially when we were buying our house recently. BofA sent me this whereas for a 0% balance transfer fee I had to pay 1.99% interest or I paid a small BT fee (I think 2/3%) and paid no interest. I took the former on $2500. I paid between $200-300/mo. Never less than $200. I might have come out better w/ the latter but it seemed as if both were a win-win either way.
    What I learned was NEVER SAY NEVER!

  4. I got an offer for a 0% APR balance transfer for 15 months on a current card I have. If the card offers 0% on balance transfers, but not on purchases, will interest be charged after the annual fee? Also, writing one of those checks to deposit into your bank wouldn’t be considered a cash advance?

  5. Thanks for the advice Darius!
    I had just recently got the freedom, and the thank you preferred cards based on my own research using what I’ve learned from your blog already. It appears that I am learning a thing or two about a thing or two, so thank you for teaching me the ways of the force, Yoda!! I got the Barclays arrival last year, based on your review of it, and there is a big unexpected benefit for me: a 1% transaction fee, 0% APR for 12 months check gets sent to me every couple months. I haven’t used it yet, because I figured I’d get my sign-up bonuses first.

    For anyone who thinks I’m crazy for financing my 2 bathroom remodel project this way, my family would agree with you, but it really does pencil out. I have a total of about $15,000 worth of work to be done on the house I just purchased from my contractor, an old friend who I trust but does not take credit card. I have budgeted $700 a month, without a debilitating effect on my lifestyle, plus my tax return which is generally within a few hundred dollars of $7000 that I will be getting this spring. My options were:

    1. to save up for the 12 months until I have my 15,000 in hand, and not start the work until then. This would leave me, A single man, with rose pink tubs and sinks for another year!
    2. Do the bathrooms piece by piece as my money came in, but this would leave me unable to use parts of the bathroom for long periods of time.
    3. Borrow against my house which I’m trying to avoid and would actually involve me paying some interest, or
    4. Get a few new credit cards with sign-up bonuses and 0% promos, keep all my balances below 30 to 50%, use my regular living expense money to pay my contractor, and then pay back the 15,000 I would have saved anyway. This way I will make a little money instead of paying any, and I’ll be ditching those rose pink tubs now. My guess is that it might even boost my credit score a little if I keep those balances low during my 12 month period. I even have two rooms I can run out in a family that can help me out temporarily if something unforeseen came up like a large emergency expense, illness, or me losing my very stable job.

    For me this strategy made perfect sense.

    Thank you again Dairius for all the great advice over the last year and a half. When I was picking one of the many blogs to follow for advice, and to support with my applications, your mother-in-law a rule made it an easy decision. I trust your advice wholeheartedly, and I do truly feel like you always give your advice with the best interest of your readers in mind instead of making a commission.

    To all the other newer readers of this blog: if you like the advice that we’re getting here for free, from a couple that puts their integrity before their paycheck, they do make a commission when we apply for many of these cards. You can support them by using their links on this blog to do your applications. And the best part is, because of Dairius’s mother-in-law rule, he still lets us know if there’s a better link somewhere else for us to use even when it cost him a commission. (It’s true, I always research all link options before I apply, when he doesn’t mention a better link to use than his, they’re pretty much isn’t one) I now even use his links when it’s just a matter of his minimums expense requirement is higher if I think I would spend it anyway.

    Dairius it’s always refreshing to do business with someone with your kind of integrity. If there’s any way that you can use any or all of this (rediculously long) comment to promote your blog, you’re more than welcome to.

    Thanks again, Zack

  6. @Zack – Interesting ideas and something I’ve never really thought about, but it seems to me you are way overpaying on your taxes. I don’t know what your personal situation is, but you’re basically giving Uncle Sam a tax-free loan of $7k every year. I could think of much better uses for ~$600/mo.

    • @Michael K – Usually not, but it varies.

      @ Zack – Thanks for sharing your experience and congrats on being so financially savvy. I financed a used Ford Escort in college using 0% APR cards! And thanks for your extremely generous compliments. Happy Holidays!