Your Ultimate Guide To 0% Intro APR

When you want to avoid interest on a large purchase or pay down a credit card balance faster, a 0 percent intro APR offer can help make it happen. Annual percentage rate — or APR — is a metric that shows the actual cost of borrowing money through a credit card, loan or another line of credit for one year. It’s generally interchangeable with the credit card interest rate.

But what does a 0 percent introductory APR offer mean? Let’s break down the ins and outs of an intro APR offer, plus mistakes to avoid with these offers and how to qualify for one in this complete guide.

What does 0% intro APR mean?

In most cases, a 0 percent intro APR is a promotional interest rate that allows you to borrow money for a limited period of time — usually between 12 and 21 months. During that time, no interest accrues on your qualifying credit card balance.

However, individual 0 percent APR credit card details vary quite a bit, with some offering longer introductory periods and more perks than others.

How does 0% intro APR work?

You’ve probably seen the tempting 0 percent introductory APR offers that credit card companies use to attract new cardholders. There are typically three types of zero introductory APR credit card offers:

1. 0 percent APR on balance transfers
2. 0 percent APR on purchases
3. Deferred interest offers

Each of these 0 percent intro APR offers could help you pay off debt faster or avoid interest entirely, as long as you pay off your balance before the introductory period ends.

0% intro APR on balance transfers

Balance transfers are often used to pay off a debt balance from other cards or loans with a higher interest rate. The best balance transfer credit cards are generally available to those with good or excellent credit.

A balance transfer credit card with a 0 percent introductory APR offer typically gives you at least a year to pay off your balance free from interest charges. After the 0 percent APR period ends, any remaining balance on the card will start accruing interest at your card’s standard interest rate.

However, you’ll likely have to pay a balance transfer fee, which typically ranges from 3 percent to 5 percent of the balance transfer amount. By transferring a balance from a high-interest credit card to a card with a 0 percent intro APR, you can ensure your entire monthly payment amount goes toward your original balance and not to added interest — at least while the intro APR lasts. 

0% intro APR on purchases

Are you planning on a large purchase soon? Some issuers offer a 0 percent introductory APR on new purchases for a limited amount of time as an incentive to sign up for a credit card. 

For example, some of the best zero-interest APR cards come with a 0 percent APR on new purchases for the first 15 months. During that time, you will only have to make payments on the principal balance on the card (the actual amount you charged) — not on additional interest.

Be sure to learn what type of offer the card is advertising so you can plan accordingly. This is a great way to fund a large purchase or pay for an unexpected medical expense, as long as you plan to pay off your debt before the 0 percent APR offer expires.

How to choose a 0% APR credit card

Now that you know what a 0 percent APR card is, you’re probably wondering how to choose one with so many options on the market. These steps can help you determine the right fit for you:

1. Check your credit score. Most 0 percent intro offer cards require a credit score of at least 670, but some have lower credit requirements.
2. Determine what kind of offer you need. Are you making a large purchase and need time to pay it off, or do you need to consolidate high-interest debt with a balance transfer? You could even tackle both goals with the right card.
3. Consider how long you need to pay it off. Most credit cards in this niche extend zero interest for at least 12 months. Some cards offer 0 percent intro APRs for up to 21 months. The offer length can help you determine an appropriate monthly payment before your credit card interest rate resets to the variable APR.
4. Understand any fees involved. Read your card’s fine print to determine whether any late fees, balance transfer fees, annual fees and foreign transaction fees could make your card more costly to use.
5. Decide if you want credit card rewards. Many credit cards with intro APR offers earn rewards, although you may want to forgo rewards if you think you’ll be tempted into spending more and paying off debt less.
6. Consider other cardholder perks. Make sure any credit cards you’re considering offer the perks you want or could use. Pick a credit card with perks you can use in the long run — or at least one with no annual fee — so you won’t have to weigh the pros and cons of keeping the account open each year.

Mistakes to avoid with a 0% intro APR offer

When you take advantage of a 0 percent intro APR offer, certain mistakes could ruin the sweet deal you’ve scored and send you back to paying the regular interest rate before the promo period expires. Avoid these slip-ups on your 0 percent APR credit card:

• Missing a payment
• Making a late payment
• Waiting too long to do the balance transfer
• Overspending
• Settling with just paying the minimum payment

When you miss a payment or make a late payment on a 0 percent APR credit card, the terms of the offer likely stipulate that the issuer could nullify your promotional offer. This also happens if you don’t make at least your minimum payment each billing cycle. In some cases, it could also result in a penalty APR.

If you’re using the 0 percent APR card to transfer a balance, you’ll want to make any balance transfers before the deadline to take advantage of the offer, typically 30 to 120 days after your card is issued. If you transfer the balance after that point, you’ll pay the regular interest rate.

What happens when a 0% intro APR ends?

When your 0 percent APR offer ends, your account converts to the terms outlined in your card agreement. You won’t owe any back interest — as long as there’s no deferred interest associated with your card’s offer — but you’ll begin accruing interest charges on the outstanding balance from that day forward.

Before choosing a 0 percent APR credit card or financing a purchase, it’s essential to understand the rates and fees that apply after the introductory period expires. This is particularly critical if you don’t anticipate being able to pay off the money you borrowed before the end of the promotional period.

Tips for maximizing zero-interest credit cards

Understanding what a 0 percent APR card is and knowing how to maximize one are two different challenges. Here are some tips for making the most of your zero-interest credit card:

• Pay off your balance before the promotional period ends. The best way to maximize your 0 percent APR card is to pay off your balance before the introductory period ends. That way, you’ll be able to access the credit you need without paying a penny of interest on it. It’s a win-win.
• Avoid adding new debt to a balance transfer. It might be tempting to add new debt to the card on top of your balance transfer amount and start carrying a balance, but this might keep you in debt longer. Plus, if you don’t pay off the balance before the intro period ends, you’ll pay interest on the balance and destroy what you were trying to do in the first place.
• Take note of offer limitations. Read your card’s fine print to learn about the limitations associated with each card offer. Some cards will entirely rescind their 0 percent intro APR offers if you miss a single payment or don’t abide by their other rules.

The bottom line

When you use a 0 percent intro APR offer to your advantage, you can fund a large purchase, catch up on old debt or borrow money without paying interest. When used properly, 0 percent APR offers can provide convenience, relief and an avenue to get ahead on your finances.

Of course, this benefit is not a free pass to spend carelessly or to buy things you can’t afford. If you don’t pay off your purchases or transfer balances before your 0 percent APR offer ends, you could find yourself right back where you started.

Frequently asked questions about 0% intro APR offers

• Does 0 percent APR mean no payments?
  

  No. Just because there’s no interest accruing on your balance doesn’t mean there are no payments. At the very least, you’re still responsible for making the minimum payment each billing cycle to keep the account in good standing.

  If you miss a payment on a 0 percent APR credit card, you risk an early end to your promotional rate, late fees and even a penalty APR in some cases.

• Is it better to have 0 percent APR or no annual fee?
  

  Ideally, you’d try to find a card with both. But if you have to choose between a 0 percent intro APR and an annual fee, then you may want to go with a zero percent APR. This choice stands to save you more money on interest over the introductory period compared to the cost of a typical annual fee.

• What’s the catch with 0 percent APR offers?
  

  If you’re paying attention to the terms of the 0 percent intro APR offer, then there isn’t really a catch. If you stick to a plan that allows you to repay the balance before the intro period ends, then you’ll avoid paying any interest. That’s a win. A catch only comes into play when you don’t know how to use these offers to your advantage.