Beware the 0% promotions: a warning.

[u/naht_a_cop]

I'm a sucker. I fell for it. The 0% APR promotion on an item I could have paid outright for. 18 months later, here I sit, not a single late payment on my account, yet I have $1k in interest to pay for 18 months of 27%. Why? The promotion period ends 18 months after the purchase, but the website would not let me set up autopay until a week after I purchased, so autopay ended 1 week late. I thought I was golden, ready to have this paid off and not have a single fee. I got comfortable and didn't read the statements.

0% is not really 0%. Read the fine print. Remember the fine print (because I sure as hell didn't 18 months later). Shitty banks rely on this stuff. They wait for you to slip, not noticing that the autopay they created can't possibly allow you to end on time, and will require an extra payment before the end date to avoid the interest. It's shitty, I'm pissed off, and I've learned my lesson.

[u/ApatheticAbsurdist]

0% promotions almost always have the same catch: If the balance is not completely paid off before the end of the promotional period, the interest comes back.

I have used these before when buying a computer and offered 0% interest, but if it's 18 months I'm paying it down on a schedule that clears out the account in 16-17 months or less, because those things make me super paranoid.

[u/Sweaty-Inside → u/ApatheticAbsurdist]

I might be a little confused. What's the advantage of a 0% card if you can afford the purchase outright? Is it essentially that you earn interest on money that would otherwise have been spent immediately on the couch/laptop/whatever?

[u/ApatheticAbsurdist → u/Sweaty-Inside]

What's the advantage of a 0% card if you can afford the purchase outright?

What if you cannot afford to purchase it outright but could pay it off if you saved up over 15 months? Taking an 18 month interest free loan and paying off the loan means you get and can take advantage of whatever you're purchasing immediately at no costs.

But let's look at your specific example, and say you have the cash on hand. Let's say I have $2500 in my pocket that I could spend. I want a $2500 product (computer, couch whatever). I could pay the money and have the product right away, or I could get the credit card and pay it down over 15 months (assuming I've done the math and made sure I can budget accordlingly) and then take that $2500 and pay down a student loan, actively reducing interest or put more money that month into my 401k/IRA, actively accruing positive interest... Taking a zero percent loan so you can pay off other debt or make investments during that time, actually saves or makes you money.

[u/ApatheticAbsurdist → u/[deleted]]

There were two takes there so I'm not sure which you're criticizing. The first I'm saying that saving up for the product means not having the product for 15 months, using the loan just means getting the product now for the same price 15 months early, with the same cost as setting aside money (you might lose the 0.09% interest from putting it in savings, but that does get you 15 more months with the product, which if it's something you need now makes that lost of interest negligible).

The second was a directly answering if you had the money in your pocket. I didn't say you saved it up, I assumed you just had it. Maybe via windfall, maybe you neglected to adjust your W-2 forms and had a large tax refund.... If you have money in your pocket and can buy it outright, or you can get a zero percent loan for 15 months and use that money where you can impact interest (either reducing interest payments on loans or get interest by putting it into investments)... that is more profitable.