“Free money doesn’t exist”…or does it?

Well, let’s see: If you could borrow money at no cost and use it to generate even more, wouldn’t that qualify as ‘free money’? This unique opportunity lies in the 0% interest credit card—a powerful financial tool when used wisely.

Let’s take a deeper dive into this tool so you can start generating your own free money.

What is a 0% interest credit card

A 0% interest credit card lets you make purchases without paying interest for a set period—typically 6 to 18 months—as part of a promotional offer. Credit card issuers use these promotions to attract new customers, as standard interest rates typically range between 18% and 29%.

To maintain your 0% interest rate during the promotional period, you only need to make the minimum monthly payment on your card. This payment is typically 1% of your balance or $35, whichever is higher.

This promotional period allows you to generate free money by strategically leveraging your 0% interest card. Let’s explore some strategies to maximize its benefits.

Strategy 1: Put money into savings account

Use your 0% interest credit card for all your expenses, and put the money you would have used paying those bills into a high-yield savings account or CD. Let your funds grow throughout the 0% promotional period. Once the promo ends, take out enough to pay off your credit card balance completely, keeping the interest you’ve earned as profit—all without paying a penny in credit card interest.

Here’s an example:

Julia signs up for a credit card offering 0% interest on all purchases for the first 12 months. Eager to make the most of this promotional offer, she uses her card to pay $1,000 in utility, insurance, and phone bills instead of spending directly from her bank account. The $1,000 she saves is deposited into a savings account earning 4.5% interest.

Julia consistently applies this strategy over the next 11 months, using her credit card to cover bills while depositing the equivalent amount into her savings account. She makes only the minimum payment on the card each month. By the end of the promotional period, she withdraws enough from her savings account to pay off the credit card balance in full, leaving her with hundreds of dollars in profit from the savings account interest—all without paying any credit card interest.

As you can see, this strategy is a straightforward and intuitive way to take advantage of a 0% interest credit card. Just be sure to make your monthly payments on time and pay off the entire balance before the promotional period ends.

Strategy 2: Pay down expensive debt

Use your 0% interest card for all your expenses and redirect the money you would have spent toward paying down your most expensive debt. This will save you money by reducing the interest on your high-cost debt and effectively converting it into cheap debt, giving you more time to get your finances in order.

Here’s an example:

Robert is struggling with over $6,000 in credit card debt at a steep 29% interest rate. Each month, he charges $1,000 in expenses to his card but can only afford to pay $1,000 toward his debt, keeping his balance stuck at over $6,000 at the 29% interest rate.

To break this cycle, Robert applies for a new credit card offering 0% interest on all purchases for the first 12 months. He charges this month’s $1,000 in expenses to the new card and uses the $1,000 cash he has to pay down his high-interest debt.

Robert continues this strategy for six months, gradually shifting his balance from the high-interest card to the 0% interest card. By the end of the six months, he has eliminated his 29% interest debt and now holds $6,000+ on his new card at 0% interest—effectively turning his expensive debt into cheap debt.

This strategy is remarkably useful for those needing financial breathing room or looking to save money on high-interest debt.

Strategy 3: Buy gift cards and liquidate for cash

Use a 0% interest credit card offering elevated cashback on grocery or office supply store purchases. Buy Visa or Mastercard gift cards from these stores, liquidate them for cash, and use the money to pay off the credit card balance. In the end, you profit from the cashback at no extra cost.

There are two common ways to liquidate gift cards:

1. Purchase a money order at certain stores and deposit it into your bank account. Note that not all stores allow money orders to be purchased with a gift card, so you’ll need to find one that does.
2. Load funds onto a reloadable debit card using the gift card and then withdraw the cash. Keep in mind that not all reloadable debit cards support loading with gift cards, so you’ll need to find one that does.

The 0% promotional period is beneficial here because it allows you to carry a balance into the following statement cycle without worrying about interest if it takes time to liquidate your gift cards. Simply make the minimum monthly payments and continue the process.

A fantastic option for this strategy is the Chase Ink Cash card. It offers 5% cashback on all office supply store purchases and includes a 0% interest rate for the first 12 months. This makes it ideal for buying Visa or Mastercard gift cards from stores like Office Depot or Staples, which frequently run promotions waiving activation fees or offering discounts that offset them.

While this strategy is more hands-on compared to others, it also offers significantly higher income potential for those willing to put in the effort.

Risks

While the 0% interest credit card can be a powerful financial tool, it’s not without risks—especially if used irresponsibly. The temptation to overspend on things you can’t afford is a dangerous trap to avoid. Remember, the 0% debt will eventually convert into high-interest debt. Overspending can make it much harder to pay off your balance when the promotional period ends, potentially leaving you in a worse financial position than when you started.

It’s also crucial to make your monthly payments on time and keep track of when the promotional period ends. Missing a payment will have serious consequences. Not only will you lose your 0% promotional interest rate, which will revert to the standard rate ranging between 18% and 29%, but your credit score will also take a significant hit, as missed payments heavily impact it. On top of that, you’ll likely be hit with a late payment fee, typically around $35.

Another important factor to consider is the impact carrying a credit card balance can have on your credit score. Carrying a balance increases your credit utilization rate—the ratio of your credit card debt to your credit limit—which is a key factor in determining your credit score. As a result, your credit score might temporarily drop. However, rest assured that it will recover once the balance is paid off.

Recommendations

One of the best perks of a 0% interest credit card is the signup bonus. These cards often come with a cash bonus you can earn by spending a certain amount within a specified period after approval. It’s a great additional benefit that complements the strategies mentioned above.

Here are my top recommendations for 0% interest credit cards:

• Chase Freedom Unlimited
  • 0% purchase interest rate for 15 months
  • $250 bonus after spending $500 within the first 3 months
  • 3% cashback on restaurant and drugstore purchases, 1.5% on all other purchases
• Bank of America Customized Cash Rewards
  • 0% purchase interest rate for 15 months
  • $200 bonus after spending $1000 within the first 3 months
  • 3% cashback in a category of your choice (gas, online shopping, dining, travel, drug stores, or home improvement)
• Discover IT Cashback
  • 0% purchase interest rate for 15 months
  • $100 bonus after making your first purchase within the first 3 months
  • 5% cashback on rotating categories

Any of these cards is an excellent way to enter the world of 0% interest credit cards, offering a great opportunity to start earning free money.

Conclusion

0% interest credit cards are a financial tool that should not be overlooked. Instead, they offer a powerful opportunity to improve your financial position. If you have strong self-discipline with spending and can responsibly pay off your entire balance by the end of the promotional period—while making the required monthly payments—this tool is definitely worth adding to your financial arsenal.

To get consistently approved for these cards, maintaining a good credit score is essential. I’ll be posting about credit score optimization, tips, and other valuable advice in the near future. If that sounds interesting, be sure to subscribe to my newsletter so you don’t miss out.

Thanks for reading this far! If you have any questions, feel free to drop them in the comments below.