Is there good credit card debt?

Is there such a thing as good credit card debt? I believe the answer is yes, but you must be able to use the debt to your advantage.

For example, have you ever used zero percent financing to make a purchase?

This is how we did it. Back in November, we purchased a snow blower.  It cost approximately $600 and we were offered zero percent financing for 1 year.  It was a great offer and well worth it if as long as we paid in full before the free financing period ends.

We did pay it off with $100 installments, so it was all ours before the snow stopped falling.  That was a good use of zero percent financing.

Zero percent financing is an expensive mistake if you don’t pay it off on time.  But let’s say you still had a balance at the end of the finance period.  What would happen?

You would have interest charges going back to the original price on the original date.  So, for our purchase of $600 at the regular credit card rate of 18.99%, the minimum payment would be $15.00 per month.  If you only paid $15 each month for 12 months, you would have only paid $180 of the $600 balance.  If you continued this, it would take you 63 months and cost you $954.27.  That’s a lot for a snow blower that’s only worth $600.

This is why it’s so important to know what you can actually afford to pay. We knew we could have the snow blower paid off in 6 months with a series of over payments.  Each over payment was like insurance, giving us extra time should something else unexpected come up.  Let’s face it, life is great at delivering unexpected surprises.

So, use the zero percentage financing options wisely. They can be a great deal under the right circumstances.