A 0% APR 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 10.5 months for cards offering 0% purchases. And it’s around 12 months for the average card with 0% on transfers.
A 0% APR does not mean you are excused from monthly payments, nor does it mean interest is completely 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.
Here’s what a 0% APR means for you:
- You pay no interest on your purchases and/or balance transfers for 2 to 21 months, depending 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.
- Zero percent 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.