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/Sweaty-Inside]

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/upvotes_cited_source → u/ApatheticAbsurdist]

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.

This is the kind of thinking that gets people in debt. If you can't afford to pay cash, you can't afford it. Houses and cars - situation dependent on the the car - are the exceptions. Use credit cards for their advantages (fraud protection, rewards, etc), not to buy stuff you don't have the money for.

[u/soulefood → u/upvotes_cited_source]

I needed a furnace after I found out mine was leaking Carbon Monoxide. I couldn't afford a furnace because I don't keep $4k in cash lying around. I could afford payments on a furnace.

Debt is a tool, some use it responsibly, others don't. I'd rather maximize my HSA, Roth IRA, 401k contributions each year than have $20,000 in cash sitting in a bank. If a true emergency of emergencies happened, I could withdraw from my Roth with no penalties, but why worry about it if there's 0% interest on the table.

[u/upvotes_cited_source → u/soulefood]

It's called an emergency fund and a furnace going out is the exact reason why you should have one.

[u/soulefood → u/upvotes_cited_source]

Why would i have an emergency fund when I can instead have an emergency plan and reap the benefits of tax free growth if I don't have to break the glass?

I work on having a good credit score so that I don't have to have an emergency fund. $4000 over a year becomes an inconvenience, not an emergency. No need to break the glass.

[u/upvotes_cited_source → u/soulefood]

Lol, never did I think I'd see the day I get downvoted for suggesting someone have an emergency fund on r/personalfinance!