Temptation of Capital One Quicksilver 0% intro APR

In my recent post, I discussed the cost-benefit analysis of credit cards.

After writing the article, I received an invitation to apply for the Capital One Quicksilver Card. Usually, I ignore credit card invitations, but this time I paid some attention. The letter stated that I would get

• 1.5% cash back on every purchase,
• $300 cash bonus once I spend $500 within the first 3 months (the official website states $200, but my personalized letter said $300),
• 0% intro APR for the first 15 months, and
• No annual fee.

First, I thought about letting the offer go, because no annual fee and 1.5% cash back on every purchase is dominated by the Fidelity Rewards Visa Signature Card, which also has no annual fee but gives 2% cash back on every purchase. I always pay credit card bills in full, so the 0% intro APR (annual percentage rate) didn’t matter. $300 cash back is nice, but it is unclear whether the opportunity cost of applying is worth it. But I used to have a card with Capital One, and I liked it, so in the end I filled out the application form (which took less than a minute), clicked the submit button, and was instantly approved for a $30,000 credit limit.

Once the card arrived and I saw the 0% intro APR for 15 months, it occurred to me that it is a very good deal. The current federal funds rate is 4.3%, and my cash position in my Fidelity Cash Management account earns interest close to that rate. Therefore, if I use the Capital One Quicksilver card for most purchases and make only minimum payments, I don’t owe any interest and can earn extra interest on my cash position. Of course, I will get 1.5% cash back instead of 2%, but taking advantage of the interest rate spread outweighs the opportunity cost. Near the end of the 0% intro APR period, I can just pay off the entire balance. I am now very tempted to do this. Perhaps I can even use this credit card to pay taxes. For my 2024 tax return, I will likely owe substantial taxes, as I made a Roth conversion during 2024. The IRS allows you to pay taxes with a credit card through a third party, which charges a 1.75% fee. But if you get 1.5% cash back and can delay the payment by one year, it is not a bad deal at all.

However, I know I need to be very careful playing around with credit cards, because I had a bad experience in the past. When I installed solar panels many years ago, I had 0% financing for a limited time, but I wasn’t paying close enough attention and missed the final payment by just a few days. I was then retroactively assessed at an interest rate over 20%. I negotiated and managed to halve the interest rate, but it was a traumatic experience for my finances.