0% APR & Same as Cash: Deal or No Deal?
The rich rules over the poor, and the borrower is servant to the lender (Proverbs 22:7).
My Story
More than one time, I dug myself out of a financial hole, vowing never to do it again. One time, I paid off all credit cards and my accounts all closed naturally due to not using them. At that time, I didn’t look at debt as the amount of money I owed but I looked at it as the amount I was behind on my bills. As long as I was meeting minimum payment requirements, I felt like a responsible adult.
To affirm that, I started getting 0% credit card offers. I felt kind of good- like I was doing something right. My hard work was paying off. So I accepted one of those deals and got a 0% credit card to fund some household projects. Around the same time, I got retail credit cards for some of favorite spots (i.e. JC Penney and TJ Maxx). I got two 6-month same as cash deals, too. One I used to fund an air conditioner which I desperately wanted and another to purchase furniture for my remodeled first floor.
Advantages
>Immediate access to products and services and extended time to pay for them at no extra cost.
>Transfer higher interest rate card balances to 0% interest cards and save money, if offered.
>No payments or minimum payments due on balances, depending on terms.
>Purchase points can convert to cash, depending on terms.
Can it Work?
Yes, using these offers can work in the real world and people successfully pull it off all the time. In fact, for the last year, I’ve been able to successfully pull it off. But this is years after breaking my overspending habit and creating heathier habits.
Does it Normally Work?
It doesn’t normally work out most of the time. The danger of these offers is credit
card companies know there’s a good chance you will spend more than planned and will not be able to pay all balances owed before the end of the promotion period. You have no leverage; you have to play by their rules. The rich rules over the poor, and the borrower is servant to the lender (Proverbs 22:7).
That’s what happened to me back in 2016 and 2017. I consolidated my credit cards by rolling unpaid balances into another 0% credit card offer. Then, I did it a third time. By that time, I was rolling over $11,000 into a credit card. I was in jeopardy of owing over $1600.00 in interest if not paid before the end of the 15-month promotion period. I was on my current debt freedom journey (which has been going strong 4 years at the time of this post) and although I normally subscribed to the snowball method, I switched things up to avoid that interest hit. I paid off the credit card and then circled back around to a smaller debt afterwards.
The game I played, is played by many people. And credit card companies bank on it. It may have happened to you. What these offers do is perpetuate a habit of spending more than you make. That math will never work; you will never build leverage that way; will never build wealth that way; will never win that game. And if you slip up at any point along the way, all bets may be off. You may be hit with interest payments, fees, and/or penalties.
Move Forward with Caution
If you’re starting a plan or are in the middle of a debt elimination plan, I caution you to stay clear of these offers. It goes counter to your goal of debt elimination, and you are still working to create new and better habits. It’s probably not a good idea to jeopardize your progress to “get a deal.”
Although, I’m not an advocate of consumer debt (I’ve seen first hard the damage it causes), there may come a time when you are disciplined enough to take advantages of these offers. You’ll need to have a strong plan for how you will be able to pay that debt timely, or you will need a cash reserve to cover the debt if it comes down to it.
So, yes, it can work. But if you cannot pay according to terms, that won’t be a deal for you.
Your Turn
Do you have first hand experience with this topic? Please share your stories and/or thoughts.
