A credit score of at least 700 is required for most 0% APR credit cards. While you could potentially qualify for a 0% interest card with a lower credit score, you will need above-average credit to qualify for the best offers.
It’s important to note that most 0% APR credit cards for below-average credit are retail credit cards, which can only be used to finance purchases with specific retailers. Some 0% APR retail credit cards also offer deferred interest. Unlike true 0% interest credit cards, these cards will retroactively charge interest on the entire initial purchase amount if there is any leftover balance when the 0% APR period ends.
A 0% APR means that you pay no interest on new purchases, balance transfers or both for a certain period of time after you open the credit card account. The best 0% APR credit cards on the market currently give 15-21 months without interest. The average 0% APR intro period is about 12 months for cards offering 0% on purchases, according to WalletHub’s … read full answerCredit Card Landscape Report, and around 13 months for the average card with 0% on balance transfers.
A 0% APR does not save you from having to make monthly payments, nor does it completely remove interest from the equation. You still have to make monthly minimum payments to keep your 0% APR, and if you don’t pay off your balance by the end of the 0% intro period, the card’s regular interest rate will apply to whatever balance remains.
The penalty is even worse with many retailers’ 0% financing offers, which typically include a feature called deferred interest. If you don’t pay off your full balance in time, interest will retroactively apply to your entire original balance – as if the 0% APR was never there.
Deferred interest: Pay no interest or a reduced rate for a period of time, but if you don’t repay your balance on schedule, the card’s higher regular APR will be applied to your original purchase amount retroactively.
It’s worth noting that some cards offer 0% APR on both purchases and balance transfers, but they may have different offer periods for each transaction. For example, a card could offer 0% APR for 21 months on balance transfers but only 12 months on purchases.
Who Can Qualify for a 0% APR Credit Card?
The best 0% APR credit cards require good or excellent credit for approval. Rarely do cards designed for people with bad credit offer 0% introductory APRs, but students with limited credit history may find attainable 0% credit card offers from time to time. People with fair credit may be able to qualify for a 0% store credit card, but they’ll have to watch out for deferred interest.
When the 0% APR period ends, the credit card’s regular APR will kick in. That rate will apply to any unpaid balance remaining on the credit card as well as any new purchases made from that point on. The regular APR that applies when a 0% APR period expires tends to be very high, so it’s best not to leave much of a balance for it to affect.
On the other hand, if you have a 0% intro APR with deferred interest (common among retail financing offers), it is vital to pay off the balance before the intro period ends. Paying one month’s bill a day late or owing even $1 when the promotional period ends could trigger the deferred interest clause; high interest charges would retroactively apply to your entire original purchase amount.
Pros & Cons of 0% APR Credit Cards
The opportunity for interest-free debt repayment can provide a lot of savings.
Credit cards with 0% APR offers usually have a high regular APR.
These credit cards rarely have annual fees.
They make it easier to spend more than you can afford to repay.
0% APR on purchases allows you to finance important things you’d otherwise have to wait to buy.
If it’s a store credit card, the offer could involve deferred interest.
Some 0% APR balance transfer credit cards have no balance transfer fee, which saves cardholders even more money while repaying a debt.
You need good credit or better to qualify for most 0% APR credit cards.
Overall, 0% interest credit cards can be extremely helpful in certain situations. But if you regularly find yourself coming up short financially at the end of the month, a 0% period may land you in a deeper debt hole by the end of the no-interest window.
Finally, it’s important to note that you may find 0% APRs on more than just credit cards. You might also see auto loans with them, for example. Just be sure to always read the terms in detail before signing. You don’t want to end up with deferred interest instead of a true 0% APR.
Tier 1 credit is generally defined as a credit score of 750 or higher. The term is most commonly used among auto lenders, but other lenders use it as well. People with tier 1 credit have the highest level of creditworthiness and will usually receive the most favorable terms on loans and lines of credit. They are considered low-risk based on their credit history, income and debt, and they are the most likely people to repay debts when compared to the general population.… read full answer
Different lenders calculate credit tiers differently. That means you could apply for a credit card, have your score pulled and determined to be tier 1, and receive the best terms possible, but on the same day apply for an auto loan and receive less favorable terms because your score ranked as tier 2. That doesn’t necessarily mean your score changed that day, the auto lender could just have stricter requirements.
Without knowing exactly how a lender determines tier 1 credit, if it even uses that terminology, it’s a good idea to look at the generally accepted credit score ranges. Credit scores range from 300 to 850 overall, with scores of 750 and up considered “excellent” – the highest tier. More lenient lenders might consider tier 1 any score of at least 640 – the start of “fair” credit. It just depends on the lender.
Checking your credit report and score regularly is an important step in understanding your creditworthiness and what you can do to maximize your chances of having tier 1 credit. For personalized credit improvement advice and free daily credit score updates, sign up for a free WalletHub account.
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