Do I need to apply for a 0% APR credit card during the coronavirus crisis?

It shouldn’t be your first option, but it’s a good backup plan in case of financial instability.

If you’re concerned about making ends meet because of the COVID-19 pandemic, a 0% APR credit card can help when money is tight. You can bring a balance with no interest charges during your card launch period, allowing you to borrow money now and pay it back later. The catch is that interest rates rise significantly after that introductory period ends.

Before signing up, you should know how to do these credit cards work and risks.

How 0% APR Credit Cards Work

A 0% APR credit card is a card with an introductory offer without interest. Each card’s offer specifies how long the interest-free period lasts and whether it applies to the purchases you make, balance transfers, or both. If you want to put expenses on your credit card and refund them later, you need a card with an introductory fee of 0% on purchases. A 0% intro APR on balance transfers is used to refinance credit card debt.

You still need to make minimum monthly payments, and a missed payment can cause the card issuer to cancel your offer without interest. Once the offer ends without interest, your card will have a higher APR and the card issuer will charge you interest on the remaining balance.

Most 0% APR credit cards require you to have good or excellent credit, but there are a few available to consumers with lower credit scores. Card issuers usually also require that you have some form of income. Unemployment income is eligible, so if you are currently out of work, it is better to apply for unemployment benefits first. After you receive an unemployment certificate confirming your weekly benefits, you can apply for a credit card based on that income.

With a 0% APR card during the COVID-19 crisis

What makes 0% APR cards so useful right now is that they provide a way to keep paying bills when you get income has been cut and you don’t have enough savings. You can put those bills on your credit card, which you can pay off the balance (as long as it’s the minimum amount) and then pay off the card in full once your situation improves.

Keep in mind that you should only do this when absolutely necessary. If you have a emergency funduse that first instead of going into debt. And make sure you only use your credit card for the most important things to keep your balance as low as possible. You don’t want to spend too much and have trouble paying off the card later.

There are some serious potential problems to be aware of. Most obvious is the possibility that you won’t be able to pay off everything at the end of the introductory term without interest. In that case, you’re stuck with credit card debt that accrues interest against your card’s new APR, making it even more difficult to pay off.

Carrying a large balance on your credit card will also save your money credit utilization ratioHigh credit utilization can cause your credit score to drop.

Do you need to apply for a 0% APR card?

It’s a good idea to apply for a 0% APR card if you can’t pay all of your bills or if you’re worried you won’t be able to pay for it in the near future. That could be because you’ve lost your job or your employer has temporarily quit, or because you think there’s a chance that either could occur.

Of course, you don’t want to borrow money if you can avoid this. You must also claim unemployment benefits if you have no work and all financial support available for you. A 0% APR card is a last resort, but it will at least give you a safety net if you don’t have other options.

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