I used a 0% APR credit card offer to pay off my car loan early – but had to break 2 of my own rules

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• Promotional interest-free credit card offers are mostly used by those who need to keep a balance.
• But I chose to keep a balance during the promotional period, so I could pay off my car loan sooner.
• I had to make the minimum payment, consider my credit rating, and plan ahead to have enough money.

As someone who likes to use credit cards to earn travel rewards, I’m always looking for ways to earn points and miles.

And since I always avoid interest charges by paying my balances in full, having 0% APR financing on my credit cards isn’t something I’m looking for. But after being approved for a new rewards card, I later realized it also came with 15 months of 0% introductory APR funding on new purchases and balance transfers.

Because I’m always looking to maximize the benefits of my credit cards, I couldn’t pass up this valuable offer.

How I Used 15 Months of 0% Introductory APR Funding

When I applied for Chase Freedom Unlimited® it was to take advantage of another introductory offer, but I also knew that I could combine these rewards into Ultimate Rewards points from my other Chase accounts, such as my Chase Sapphire Reserve®.

But it wasn’t until I received my first statement that I remembered that this card also included a 0% introductory APR on purchases and balance transfers for the first 15 months (then a regular variable APR 18.74% – 27.49%). I immediately rejected the idea of ​​using this offer by making a balance transfer, as I would incur a 3% balance transfer fee (minimum $5) if the transfer was made within 60 days of the account opening. However, it occurred to me that I could hold a balance on this card for 15 months, without incurring interest charges.

I used this card for all my daily expenses, and even for purchases that might have a similar or lower bonus with other cards. With all of my household expenses going through this card, I would reach my card’s credit limit of $18,000 within months if I only made the minimum payment. And since no interest was charged, there was no cost to do so, as long as I paid the full balance before the promotional financing period expired.

Considering the disadvantages

Interest-free financing may sound too good to be true, but as a credit card expert, I know that these offers have many potential pitfalls.

1. I still had to make the minimum payment

First, I should make the minimum payment each month — no interest doesn’t mean no payment. Making payments reliably was easy to do by setting up automatic payments and setting them to make only the minimum payment each month as shown on statements.

2. I had to consider the impact on my credit score

I also realized that having up to $18,000 in debt every month could have hurt my credit rating. Amounts owed make up 35% of your FICO score, more than any other factor. Fortunately, the amount you owe is considered relative to your total credit extended, a factor called your credit utilization rate.

Since I have many credit cards with little or no balances reported each month, having a substantial balance on this one card hasn’t significantly reduced my credit rating. Nonetheless, if I had planned to buy or refinance a home, I wouldn’t have carried a balance, 0% APR or not.

3. I had to make sure I had the money to pay for it

More importantly, I had to make sure I had the full amount available in cash 15 months later or I would start incurring interest charges on any remaining balance. And as all credit card users must do, I had to fight off any urge to spend more than normal, given that I would be paying later.

4. I had to ignore my own advice

And ultimately, I had to go against every instinct I had and every piece of advice I’d ever written. I would carry a balance and only make the minimum payment, the two things chip credit card users should never do! But by paying off the entire balance before the promotional rate expired, I was able to break this rule at no cost.

Using the 0% Introductory APR Helped Me Pay Off My Car Loan Sooner

By keeping $18,000 in credit card balances for over a year, I was able to really smooth out my finances. I could make larger purchases before receiving the income, but I was careful not to go too far.

And towards the end of the promotional financing period, I decided to prepay one of my auto loans, which I would not have been able to do otherwise. It was a very low interest loan, but it was good to pay off that debt sooner.

Interest-free promotional financing offers are primarily used by those who need to carry a balance. But for those with no balance, these offers can be a valuable way to give your finances some breathing room and even pay off some loans early.

By understanding the risks and benefits of these offers, you can make the right decision for your finances.