If you’ve purchased a home in the last six months, now might be the time to apply for a credit card with a zero percent interest introductory offer. Here’s why: Home buying typically begets other spending.
A National Association of Home Builders study of four years of home-buying data found that a typical buyer of an existing home spends on average $3,600 more during the first year after owning the home than a homeowner who does not move.
This data was published in 2008, so the situation for home buyers may be different today. But from my own experience, moving expenses don’t stop once you close on the house.
CARD SEARCH: Apply for a no-interest credit card today.
12 months or longer
My wife and I moved into our third home together last year. Within the first month, we bought a new bed, a refrigerator, washer and dryer, futon couch and a television.
We paid for these things using a combination of savings, store credit promotions and credit cards. In retrospect, it would have been nice to have had more time to pay off these purchases without incurring interest charges.
Enter no-interest credit card promotions.
If you have good credit, there are plenty of available introductory offers that include free financing for a year or more. You just have to be mindful about paying off the balance.
“You’ll want to make sure you pay off the balance before the intro period expires or you may find yourself paying interest retroactive back to day one,” John Ulzheimer, a credit expert who formerly worked for FICO and Equifax, tells me via email.
If you’re paying off over time, watch out how much of your available credit you’re using, Ulzheimer says. Use too much relative to your credit limit and you risk damaging your credit score.
When to use other financing
If you have eyes toward making changes to your new home, there might be a better option than a no-interest credit card. Consider a home equity line of credit instead, Ulzheimer says, to pay for renovations or remodeling.
“A HELOC may be a better option because the interest is tax deductible and the rates are already very low if you’ve got good credit,” Ulzheimer says. “And the credit card balance-to-limit ratios that are so important in your (credit) scores, do not consider HELOCs.”
RATE SEARCH: Find low-interest HELOCs in your area.