Should you book a vacation with a 0% APR credit card?

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This may sound like a good solution, but is it?


Key points

  • You might be tempted to book travel plans with a 0% interest rate credit card.
  • While this can be a good strategy, it can also backfire if you don’t pay it back soon enough.

Now that summer is approaching, many people are seriously considering making their vacation plans a reality. If you’re one of them, you might be considering charging your trip to a credit card with an introductory APR of 0%. This may seem like a good solution, but you’ll have to be careful when going down this route.

Are you really going to pay that balance on time?

Some 0% interest credit cards come with a longer interest-free introductory period, say 18 months or even longer. Others give you a year without interest.

It’s easy to see why it might be tempting to book your trip using one of these cards. That way you have time to pay off your balance without accumulating interest that drives up the cost of your vacation.

The danger, however, is that eventually the 0% interest period will end. And if your balance isn’t paid off by then, you could end up with a ground interest on the amount you still owe. That’s why, as a general rule, it’s not a good idea to charge an expense to a credit card unless you already have the money to pay it or you’re sure you’ll receive it. money soon.

Say you’re planning a $3,000 vacation, but you already have that $3,000 in your savings account, earmarked for the trip. In this case, there is little danger in charging your expenses to a credit card – one with an introductory APR of 0% or any other card, for that matter.

Similarly, let’s say you bill $400 for theft but know that your next paycheck at the end of the month will more than cover that expense. This too is a pretty safe decision. What you should not to do, however, is to charge for a $1,500 trip knowing you haven’t already saved $1,500 and not knowing if your upcoming paychecks can cover that cost.

There may be a better credit card to use

Some 0% APR introductory credit cards offer perks like cash back on purchases. But it pays to compare those rewards with the rewards another credit card might give you.

Let’s say you’ve already saved money for a vacation and your main motivation for using a credit card is to get rewards. In this case, it may be best to book your plans on a travel rewards credit card. Some travel cards come with money-saving perks, like in-flight purchase discounts and free checked bags. Therefore, before assuming that an introductory 0% APR card is the best solution, consider other options.

All in all, booking a trip with a credit card is often a smart move. This way, you will not only have a chance to reap rewards, but also enjoy some protections. But if your plan is to charge for a trip you can’t currently afford with an introductory 0% APR credit card and you’re hoping for the best, you might want to think again – before you end up with a pile of costly debts that you cannot easily pay.

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