Quick Answer
Strategic use of low-cost credit can keep cash deployed in higher-return uses - but only when financing cost is meaningfully below the return on the preserved capital.
Key Takeaways
- Promotional 0% APR financing can be used to preserve cash reserves.
- Lines of credit serve as liquidity backstops without requiring drawdowns.
- The strategy fails when promotional periods expire and balances remain.
The Cost-Of-Capital View
If cash on hand can earn more than the cost of credit, preserving that cash by using credit instead can be value-additive - provided the credit is repaid before higher rates kick in.
Frequently Asked Questions
Is promotional 0% APR financing actually free?
Promotional periods are interest-free only while they last. Educational sources note that any balance remaining after the promotional period accrues interest - sometimes retroactively, depending on the product's terms.