The Sneaky Truth About “No Payment” Credit Card Promotions

You see those ads all the time: open this new credit card and make no payment for six months! Maybe you’ve been eyeing a new TV or furniture purchase. It’s tempting—and that’s the point.

What the financial may be hiding in the fine print is that during the six months you’re spending money and not paying your balance, they’re charging you interest. These days, that interest rate can be as high as 30% APR! APR stands for annual percentage rate, and that’s what you’ll be charged each month if you carry a balance. For example, if you have a balance of $1,000 on a credit card at 30% APR, the financial will be charging you $300 per month just for having that balance.

So, what can you do to identify and avoid these sneaky “deals?” These credit card promotions should have fine print that discloses whether interest will accrue during the six months of no payments. Start there and then decide whether opening that new card is worth it or not.

Keep in mind that it is always best to pay off your credit card balances each month, if possible, to avoid interest charges. However, unexpected large expenses are a part of life, so if you have multiple credit cards, go through your agreement to identify your lowest APR card and put large expenses on that one if you have no other choice.