The 1 Situation When Going Into Credit Card Debt Makes Sense

Pretty much everyone has heard the advice that you should never carry a credit card balance. And in general, this is pretty good financial advice. The average credit card interest rate is 21.47%, and who really wants to make all of their purchases cost that much more?

There is, however, one exception to the general rule that you should avoid credit card debt at all costs. In fact, in one particular circumstance, borrowing on your cards may actually make the most financial sense.

Here's what that situation is, along with some tips for how to decide whether using your card in this way could be a good move.

Credit cards come with a huge interest rate -- except in this situation

The one situation where carrying a credit card balance could be a good move is if you can get a card offering a 0% promotional APR on purchases in order to fund an essential purchase that you need but cannot afford to pay cash for.

Let's say, for example, some expensive part like a transmission goes out on your car. If you need $2,000 to replace it so you can get to work and you have a card with a 0% promotional APR on purchases, you could charge that transmission rather than, say, taking out a personal loan for it.

A 0% promotional APR is usually good for purchases you make within a certain time period after you get the card, so you might need to get a new credit card in order to do this. And it's usually good for a limited period of time, such as 12 months or 15 months. So, if you got a new card to charge your $2,000 transmission and had 15 months to pay back the money without interest, you might be able to avoid borrowing costs altogether by paying $133.33 each month for 15 months until the balance is repaid in full.

A 0% promotional APR card would be your only real opportunity to do that, unless you could come up with money from savings or borrow from a loved one interest free. Outside of those situations, paying no interest far beats paying for personal loan interest (especially given that the average rate on a personal loan right now is 12.35%).

The caveat, though, is that if you don't pay back the borrowed amount by the end of the 0% period, you'd have to pay interest at the card's standard rate on any balance that remains. This could get expensive, especially if you have a big balance left on your account. So you'd want to be sure you could pay off the balance before the 0% rate ended.

Should you use a 0% APR card for a big purchase?

Using a 0% APR card can be the most affordable borrowing option out there. But that's true only if you are 100% confident you're going to pay enough to become free of credit card debt before you get stuck with months of interest at the standard rate. Figure out exactly how much you'd need to send to your creditors each month and work that amount into your budget.

Since there's always some risk to taking on credit card debt (for example, you'd still be responsible for paying it if you lost your job or suffered from other unforeseen hardship), you don't want to charge non-essential purchases at all. So, unless the purchase is an important one, save up to pay in cash rather than relying on a 0% APR card and risking something going wrong in the end.