If you couldn't afford a large purchase in the past, you have probably considered the prospect of taking out a short-term loan. Buying appliances, new furniture, or a new backyard pool can be an expensive endeavor, after all, and you may not have all the cash you need at once. By taking out a short-term loan, on the other hand, you could break this new expense into smaller, more manageable monthly payments.
Still, a short-term loan isn't as hassle-free as it sounds. Most of the time, you need to visit a brick and mortar bank in person to apply. Plus, interest rates can be high for people who have anything other than excellent credit.
Hate Loans? Consider a 0% APR Credit Card Instead
For the sake of convenience and savings, it might be wise to consider a credit card instead of a loan in the future. By getting approved for a 0% APR credit card, you can create your own short-term loan with no interest for anywhere from 12 – 21 months.
There are several reasons a credit card can be a better option. First, getting 0% APR for anywhere from 12 -21 months can help you save a boatload of money on interest. And if you're able to pay your balance down in its entirety before the 0% introductory APR offer is up, you can effectively get this "short-term loan" for free.
The second big benefit is that you can apply for a 0% APR credit card online and from the comfort of your home. The vast majority of the time, you won't even have to submit pay stubs or tax returns, either. Once you choose a card, you just need to fill out the application with your current income, address, and employment status. Usually, you'll get a response in less than a minute.
How to Use a Credit Card as a Short-Term Loan
To see how a credit card can be the perfect short-term loan in certain situations, consider this example.
Let's say you plan to buy new furniture and hope to spend less than $3,000 including delivery and taxes. You find a sofa, recliner, and occasional tables you love, and take a day or two to decide if the purchase is worth it.
Once you're ready to move forward, you would apply for a 0% APR credit card instead of accepting financing from your furniture store. Once you gain approval and receive your credit card in the mail, you would head to the furniture store and use your new card to pay.
If you put your new furniture on a Chase Slate® card in this scenario, you would have 15 months to pay off your new purchase at 0% APR. If you spent your full budget of $3,000, you would need to make a minimum payment of around $200 per month to have your balance paid down by the time your introductory 0% APR expires.
Best of all, most 0% APR credit cards, including the Chase Slate® card, don't charge an annual fee. As a result, they can function as a "free" short-term loan if you use them for a large purchase, then pay off the loan before interest begins to accrue.
If you're seiously considering a large purchase of any kind, a credit card might be the ideal alternative to a short-term loan. By using your card for a large purchase and paying it off slowly at 0% APR, you can score manageable monthly payments and save money on interest in one fell swoop.
Just remember to shop around for the best 0% APR credit card before you pull the trigger. While each 0% APR card offers its own unique set of benefits, some cards truly stand out from the rest. The best "short-term loan" for your needs will offer no interest for as long as need and never charge an annual fee.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.