You can pay off your 2021 holiday shopping through 2023 with a 0% APR card—here's what to know - CNBC

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The holidays are fast approaching, and consumers are expected to shell out $1,463 per household on presents this year, according to Deloitte's Holiday Retail Survey, up 5% from last year.

That's no small chunk of change, and you might be worrying how you'll pay for all those presents without racking up a bunch of credit card debt. More and more people are turning to 'buy now pay later' loans (BNPL) to spread out the cost of gift-giving across a couple of months. However, BNPL lack many of benefits and consumer protections that credit cards offer, so you'll definitely want to read the fine print before you sign up.

If you want even more time to pay off your holiday shopping spree (we're talking nearly two years) as well as added perks and consumer protection, you should look into opening a 0% APR credit card.

This type of card will give you spending flexibility, the ability to earn rewards and if you set up a repayment plan, you won't have to pay credit card interest. Here's what you need to know:

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How to use a 0% intro APR credit card this holiday season

A 0% intro APR credit card offers consumers a designated interest free period (usually six to 21 months) on purchases and/or qualifying balance transfers. This gives consumers the ability to avoid paying sky-high interest rates on their balances, without giving up the spending flexibility and the many benefits of a credit card. And during times of heavy spending (like the holidays), they can be a great way to split up big expenses over a long period of time.

Let's say you plan on spending $1,500 this holiday season. If you were to put those purchases on a credit card with a 15.99% APR, and you just made the minimum payment each month (let's say it's $40), it would take you 53 months to pay off the card and you'd spend nearly $600 in interest.

However, with the right 0% APR card, you can avoid interest and earn cash rewards. For example, if you spend that same $1,500 on the Wells Fargo Active Cash℠ Card, which offers a 15-month 0% intro APR on new purchases (variable APR will be 14.99% - 24.99% after that), you can also earn 2% cash rewards on all eligible purchases.

With 0% APR cards, you'll still need to pay at least the minimum each month. And to make the most of the card, it's best to figure out a payment plan, so you can pay off the balance before the introductory period ends. With the Wells Fargo Active Cash card, you'll want to pay at least $100 per month over the 15-month period to avoid interest charges.

The cards below all offer an introductory 0% intro APR, along with a list of other benefits.

Citi Custom Cash℠ Card

On Citi's secure site

Rewards

5% cash back on purchases in top eligible spend category each billing cycle, up to the first $500 spent (then 1%); unlimited 1% cash back on all other purchases
Welcome bonus

Earn $200 cash back after spending $750 on purchases in the first 3 months of account opening. The bonus offer will be fulfilled as 20,000 ThankYou^® Points, which can be redeemed for $200 cash back.
Annual fee
Intro APR

0% APR on balance transfers and purchases for first 15 months
Regular APR

13.99% to 23.99% variable
Balance transfer fee

5% of each balance transfer ($5 minimum)
Foreign transaction fee
Credit needed

Excellent, Good

Terms apply.

Chase Freedom Unlimited®

On Chase's secure site

Rewards

Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year, 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% on drugstore purchases and on dining (including takeout and eligible delivery services), and 1.5% cash back on all other purchases
Welcome bonus

$200 cash back after you spend $500 on purchases in your first 3 months from account opening
Annual fee
Intro APR

0% for the first 15 months from account opening on purchases
Regular APR

14.99% to 24.74% variable on purchases and balance transfers
Balance transfer fee

Either $5 or 5% of the amount of each transfer, whichever is greater
Foreign transaction fee

3% of each transaction in U.S. dollars
Credit needed

Excellent/Good

Terms apply.

Blue Cash Everyday® Card from American Express

On the American Express secure site

Rewards

3% cash back at U.S. supermarkets (up to $6,000 per year in purchases, then 1%), 2% cash back at U.S. gas stations and select U.S. department stores, 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits.
Welcome bonus

Earn a $200 statement credit after you spend $2,000 in purchases on your new card within the first 6 months.
Annual fee
Intro APR

0% for the first 15 months on purchases, N/A for balance transfers
Regular APR

13.99% to 23.99% variable
Balance transfer fee
Foreign transaction fee
Credit needed

Excellent/Good

What to keep in mind when choosing a 0% intro APR credit card

All 0% intro APR credit cards have the same major benefit: Giving cardholders the chance to avoid interest charges for a specific amount of time. However, these cards are not all created equal. Keep these points in mind when choosing a 0% intro APR credit card:

Cash back or travel rewards

Not all 0% APR cards offer a rewards program, though many do. Consider if the length of the intro offer is more important to you, or if you want to earn cash rewards. For example, you can get 2% cash rewards on all eligible purchases with the Wells Fargo Active Cash℠ Card. But if rewards aren't important to you, the Citi Simplicity® Card offers a whopping 21-months of interest free-financing (14.74% to 24.74% variable after; balance transfers must be completed in the first four months).

Length of 0% introductory period

Each card offers a different length of time for the introductory APR period, which typically ranges from six to 21 months months. It is wise to evaluate how fast you will be able to pay your balance off. If you are unable to pay off your credit card balance before the introductory APR period ends, the card will resume charging its normal interest rates.

Consumer protections

If you're making holiday purchases with this card, you'll definitely want one that offers some consumer protections. With the Chase Freedom Unlimited®, you will have purchase protection and extended warranty protection, which insures purchases made with the card against theft, damages or defective products. While there are some restrictions for these coverages, it requires no additional work on your end. Simply swipe with the respective card, and your purchases are protected. The Freedom Unlimited card offers 0% introductory APR for 15 months on purchases and balance transfers (variable APR 14.99% - 23.74% thereafter).

Your credit score

You usually need a good or excellent credit score to be approved for a 0% intro APR credit card. Credit card issuers have strict requirements for these cards because they want to be sure you will pay back your balance in full, so they aren't left with a potentially high balance card without payment. Additionally, these types of offers are considered something of a reward for keeping your credit score high, as cards geared toward consumers with less-than-perfect credit do not come with these types of promotions.

Bottom line

A 0% intro APR is a simple way to finance your holiday purchases over an extended period of time without paying hefty interest charges. Plus, some of the best cards also have generous welcome bonuses, strong consumer protections and robust rewards programs, making these 0% APR credit cards offer a great value to consumers.

However, before you start your holiday shopping this year, be sure to set a budget for yourself to ensure you do not start the new year off in more debt than you anticipated. A credit card is a great financial tool if you use it smartly and take steps to avoid taking on additional debt.

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For rates and fees for the Blue Cash Everyday, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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