0 APR Promotional Offer For Credit Cards

Question

I’m currently learning about personal finance and I just found out that there are some credit cards that will give zero interest rate for a certain period of time (10-20 months).

I know that to get a credit card you have to apply for one and get approved but what happens if you cancel the card later (with no remaining balance) and reapply for the same card? Would you be able to get the same promotional offer again?

Also would applying and cancelling repeatedly be a bad thing for credit score even if there is no balance in the cards and ignoring credit history length because I could just have a credit card that I hold onto long term?

Answer 1

Would you be able to get the same promotional offer again?

You can't get the promotional offers on the same card immediately, and some are once in a lifetime. You might be able to string together multiple 0% APR promotions across different cards long enough that you could qualify for the first card again. This isn't a very good idea though. 0% is only beneficial if you're carrying a balance which isn't a great idea. They're hoping you have a late payment or break some other rule that kicks you out of the promotion and into a fat interest rate.

You're also likely not getting the best rewards on a 0% APR card, since the cost of credit card rewards are baked into prices it makes sense to get a card that has competitive rewards.

Also would applying and cancelling repeatedly be a bad thing for credit score...

It's not great for your credit score, but short-term cards don't hurt much once you have a decent credit history. You'd want to open some other card and keep it as your oldest line of credit.

If you want to know how often you can get the rewards for various cards, you can search for credit card churning. You'll find good info on how much impact churning has on credit score too. It's a way that some people make extra money, but it takes a fair bit of work and discipline.

Answer 2

There is already a great answer here, but I'd like to add something that is slightly more than a comment. You wrote:

what happens if you cancel the card later (with no remaining balance)

and

would applying and cancelling repeatedly be a bad thing for credit score even if there is no balance in the cards

If you are able to pay off your balance every month, then the interest rate is irrelevant, and if you aren't able to pay off your balance every month, then 0 APR teaser rates are a great way to find yourself in a lot of debt.

Answer 3

I previously managed several credit cards, often getting one with a 0 APR ahead of big expenses. Some banks offered cash rewards for meeting spending targets in the initial 3 months, allowing me to benefit from the 0 APR and earn extra money. This method was useful in handling my larger financial obligations. An excess of credit cards might contribute to headaches. It's important to note that maintaining a consistent balance clearance each month renders the interest rate inconsequential, but failure to do so can lead to substantial debt, making 0 APR teaser rates a potentially risky choice.

Answer 4

0% APR is a trash reward unless you need to responsibly use the CC as a personal short-term loan.

Realistically, it doesn't matter which CC you have as long as the yearly fee is zero and you pay the balance in full when the bill comes.

As for the idea of re-applying for a CC, I've found the wait time is usually 12-36 months.

I typically sign up for CC's which tout things like:

$200 credit if you spend $1,000 in the first 3 months

Essentially, 20% cashback on money was gonna spend anyways?? Sign me the funk up! I've signed up for 4 CCs in a single week before because I was planning on a large purchase anyways. Why use cash or settle for my main CC's paltry 1-3% cashback when the new CC will reward me handsomely for using them?

The same CC sent me the same offer a few months later and upon applying it let me know that not enough time has passed since my previous acquisition of their card.

Aside from these lucrative promotions, I stick to my main long-term CC which gives me good rewards.

The enticing CCs just end up collecting dust in a box somewhere until they get auto-cancelled for inactivity which typically raises my credit score and makes other banks send me more offers =)