Key points:
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Credit cards that offer a 0% introductory annual percentage rate (APR) don’t charge you interest on purchases, balance transfers, or both, for a specified promotional period.
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When comparing intro 0% APR offers, review the length of the introductory period and the standard APR after it ends.
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If you’re transferring a balance to try to save money on interest, consider balance transfer fees, which can range from 3%-5%.
A credit card with a 0% introductory APR promotion may help you manage a major expense. Likewise, if your credit card’s high interest rate makes repaying your balance difficult, you might consider moving your debt to a card with a 0% APR balance transfer promotion. Let’s review what an intro 0% APR is, the potential advantages of an introductory 0% APR credit card, as well as tips for using a credit card with an intro 0% APR offer.
What does intro 0% APR mean?
“APR” stands for “annual percentage rate.” It refers to the interest rate that your credit card issuer charges you for using your card. An introductory 0% APR means that a credit card doesn’t accrue interest (on purchases or balance transfers, depending on the offer) for a period of time after your account opening. Keep in mind that an intro APR doesn’t necessarily last a full year—you may owe interest after several months.
Credit card companies typically require you to have good to excellent credit to qualify for an introductory 0% APR offer. Check your credit score and the card issuer’s minimum requirements before applying to see if you may qualify.
If you apply, a credit card issuer may conduct a “hard inquiry” by checking your credit report. This can temporarily lower your credit score. So, if you want to avoid impacting your credit, you may want to apply only if you think you’ll be approved.
How an intro 0% APR credit card works
Credit cards offering introductory 0% APR don’t charge interest for a specific time period (typically six months to a year) on purchases, balance transfers, or both. That could mean you can save on interest if you plan to carry a balance during the introductory period or transfer a balance from another card. After the intro period ends, the APR changes to the standard rate stipulated in the credit card’s terms.
During the intro 0% APR period, you’ll need to pay at least the minimum payment due every month–just like a normal credit card–to take advantage of the offer. If you pay off the full balance before the end of the introductory period, you won’t receive an interest charge, which may save you money.
How to compare intro 0% APR credit cards
A few key considerations may help you find the best 0% APR credit card for your needs.
One of the first factors to consider is the type of transaction the 0% intro APR offer covers. The card may offer 0% APR on regular transactions—like groceries or online purchases—but charge interest on balance transfers. On the other hand, the card may have a 0% APR on balance transfers, but a standard purchase APR. The 0% APR offer might even apply to all transactions, including balance transfers. Knowing how you want to use the card can help you make a decision that’s best for your needs.
When comparing intro 0% APR credit card offers, it’s also important to look at the length of the introductory period. Depending on your situation, you may need a card with a longer introductory period to pay off your balance in full. You should also consider the standard APR after the promotional offer of 0% APR ends.
If you’re planning on transferring a high-interest balance, make sure to take into account any balance transfer fees. Fees can range from 3%-5% of the transfer amount.
Additionally, you should know if the new card has an annual fee or not. An annual fee could completely offset the money you’re hoping to save on interest. When comparing, you can look for credit cards that offer no annual fee. By taking the time to research your options, you’ll find the introductory promotional period offer that’s right for you.
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Why apply for a 0% intro APR credit card offer?
Anyone who carries a credit card balance may benefit from a 0% APR credit card offer. However, it might be especially useful for the following reasons.
- Holiday shopping. Using an intro 0% credit card during the holidays can be one way to lessen the financial strain from gift shopping, travel, and entertainment. Plus, some Discover® Cards with a 0% intro APR also offer cashback bonus rewards, with specified categories earning extra cash back on purchases around the holidays.
- To buy a big-ticket item or several one-time purchases. Whether you’re planning a vacation, buying a major appliance, or facing several one-time purchases following a recent move, a credit card with an intro 0% APR may be able to save you money on interest versus a regular credit card.
- To pay down other loans. You can use introductory 0% APR balance transfer offers to reduce the interest you owe on other loans besides credit cards, including car loans, and even home equity lines of credit. However, if you’re not sure that you can completely pay off your balance during the introductory period, you might face a high interest charge when the promotional APR ends. Credit card interest rates are normally higher than rates for other loans, so be careful that you’re not trading a low interest rate on a loan balance for a higher credit card APR.
- To pay down high interest credit card debt. When you’re in debt, interest payments and late fees may make paying off your credit card balance difficult. By consolidating your debt with a new credit card that has 0% interest, you may be able to simplify your payments and focus your efforts on paying off your card sooner by putting your entire monthly payment toward reducing your balance.
Did you know?
High interest rates can make it difficult to repay your credit card balance and reduce your credit utilization. Making a balance transfer to a credit card with a low introductory APR can be one way to reduce debt quickly.
When shouldn’t you do a balance transfer to an introductory 0% APR card?
There are circumstances when a balance transfer credit card may not be worthwhile for you. For example, if you don’t think you can pay off the balance by the end of the intro period, you could end up paying more in interest and fees than if you had left the balance where it was.
Another example would be if your current balance is small enough to pay off in a few months. In this case, the balance transfer fee on the 0% intro APR card could be more than the amount you would save in interest.
Tips for using an intro 0% APR credit card
The following guidance could help you make the most of a 0% APR introductory promotion.
Make sure you can repay your entire balance
You can take advantage of introductory 0% APR promotional period offers to save money, typically by transferring a balance from a higher-interest card or making a pricy purchase that you pay off over time. However, if you don’t repay the balance by the end of the promotional period, it starts to accrue interest. Have a plan to pay off the balance of an introductory 0% APR credit card by the end of the intro term.
No interest doesn’t mean no minimum balance due
You still have to make a minimum payment each month even though you don’t have to pay interest during an intro 0% APR period. If you miss the required monthly payment, you’ll lose your introductory APR rate and may incur late fees. Late payments could even result in a higher penalty APR that outweighs your savings.
Know when the 0% APR intro period ends
It’s easy to get into the habit of letting your balance grow when you’re not paying interest. But if you fail to pay your outstanding balance before the 0% APR intro period ends, you may struggle to pay back the balance and the higher interest, leaving you further in debt.
Avoid making purchases on a 0% intro APR balance transfer card
With an intro 0% APR offer that’s only good on balance transfers, you can usually carry the balance month-to-month while taking advantage of the interest savings. If you make purchases with the card, however, you’ll be charged interest because the 0% APR doesn’t apply to those transactions. Be sure to know if you have a card with an intro 0% APR promotional period that applies to both balance transfers and regular purchases.
An intro 0% APR credit card can be beneficial for some people, and for others, it may not make sense to try to apply for one. Now that you know what 0% intro APR means, you can determine if one of these credit cards will be right for you.
