Zero-interest credit cards charge a 0% interest rate on purchases and/or balance transfers for the duration of the introductory period – typically from 6 to 21 months, depending on the card. When the intro APR period ends, the regular interest rate kicks in for any remaining balance and any future purchases or balance transfers charged to the card. The average 0% APR period lasts for about 11 months.
Due to the fact that 0% APR credit cards provide a potentially long window for interest-free repayment, they’re especially useful in financing big purchases or paying off large debts. The card’s best use, however, will depend on the terms of the introductory APR period. Some 0% interest credit cards only offer zero interest on purchases, while others only offer it for balance transfers. Some offer the intro period for both purchases and balance transfers.
When you’re shopping for a 0% APR credit card, it’s a good idea to know what you want to use the intro period for, so you can get the card that benefits you most. Keep in mind that credit cards with 0% interest periods usually do not give way to a low regular APR. The average regular interest rate for a 0% APR credit card is about 19%, so it’s best to have a plan to pay off any balance on the card before the intro period ends. A credit card payoff calculator can help.
A 0% APR credit card won’t hurt your credit score more than other types of credit cards would. Opening a new credit card – whether it’s a 0% APR card or a rewards card, for example – will cause a small credit-score drop, due to the hard inquiry required by most credit card companies when evaluating an application. A 0% APR card won’t hurt your credit simply by existing on your credit report, though, assuming the card is used responsibly.… read full answer
If you use a 0% credit card to spend more than you can afford to repay before the card's regular interest rate takes effect, you may be charged a lot of money in interest. Even if you then transfer a high-interest balance to a 0% APR credit card, you will likely have to pay a balance transfer fee. You can learn more about the potential downsides of 0% APR credit cards below.
How a 0% APR Credit Card Could Hurt Your Credit
Overspending. A 0% introductory period makes it easier to rack up a bigger bill than you’d planned on or can manage. No interest means there’s less pressure to pay off your balance in full every month, too.
Missed payments. If your 0% APR period turns into a high regular APR when you’re carrying a large balance, it could quickly become unaffordable. And if you’re unable to make the minimum payments, your credit score will definitely take a hit.
High credit utilization. Many people get a 0% APR credit card to pay off a large purchase over time without paying interest. That’s a good use of a 0% APR period. But if the purchase takes up most or all of the card’s credit limit, the cardholder’s credit utilization will go up. High credit utilization could damage your credit score.
It is worth noting that if you won’t need your credit score for anything important for a while, temporarily high credit utilization is better than paying a lot in interest. Also, don’t worry about negative remarks on your credit report just because you aren’t paying interest—there’s no truth to that claim.
Ultimately, if you’re considering getting a new credit card for its 0% APR period, the best things you can do to minimize the chances of hurting your credit are to always make payments on time and avoid maxing out your credit limit. Also, it’s not a bad idea to set spending boundaries beforehand to avoid paying the regular interest rate after the promotional period expires.
When a 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.… read full answer
The only exception to this rule is a 0% interest period with a feature called deferred interest. General-purpose 0% credit cards don’t have it, but some store credit cards do. This isn’t a true 0% APR deal because the interest is still accruing while it’s “deferred,” and it will apply if you don’t pay your balance on schedule. So when the 0% APR ends on a deferred interest financing offer, you’ll be charged interest on the original purchase amount, as accrued from the purchase date, if you have even $1 of your original balance left to pay. Your deferred interest could also return prematurely if you make a late payment, and it’ll likely be a lot more expensive than a late fee. That’s why it’s very important to make on-time payments on deferred interest credit cards, and to pay off the balance before a deferred interest period is over.
Even though a credit card with a true 0% APR period won’t retroactively charge interest on purchases, be smart with these cards. Interest will apply to any balance remaining when the 0% period ends, so plan out your payments to ensure there’s little left at that point. Using a credit card payoff calculator can be a big help.
A 0% APR (also known as zero interest) means that you pay no interest on new purchases and/or balance transfers for a certain period of time. The best 0% APR credit cards give 15-18 months without interest. But the average 0% APR intro period is about 12 months for cards offering 0% purchases. And it’s around 13 months for the average card with 0% on transfers.… read full answer
A 0% APR does not keep you away from monthly payments, nor does it completely remove interest out of 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, you’ll have to pay interest on whatever balance remains. The penalty is even worse with many retailers’ 0% financing offers. 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.
There are a few other things you should keep in mind when thinking about 0% APRs, too.
0% APR Key Takeaways
You pay no interest on your purchases and/or balance transfers for the duration of the introductory APR period, which depends on the card.
0% APRs make debt cheaper to pay off, which helps you get out of debt faster.
A 0% APR does not free you from the responsibility of making monthly payments. You must pay at least your monthly minimum to avoid being classified as late. Late payments damage your credit score.
0% credit cards tend to have fairly high regular APRs. So, you should strive to bring your balance to zero by the end of the 0% APR period, when regular rates take effect.
It’s also important to note that you won’t only find 0% APRs on credit cards. You may 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.
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