You’ve probably gotten a credit card offer in the mail with a 0% APR and contemplated applying. The prospect of paying no interest for a certain length of time is appealing, especially if you want to finance significant purchases or pay off debt.
However, the terms differ every credit card, and you may be unaware of all the rules that apply to 0% APR offers. Before you accept an offer and apply, it’s crucial to understand how a 0% APR credit card works so you can take advantage of it.
Select examines the intricacies of 0% APR credit cards and how to utilize them properly to avoid interest on future purchases and debt.
How do credit cards with 0% APR work?
A credit card with a 0% APR pays no interest for a set period of time, usually six to 21 months. You will not be charged interest on new purchases, balance transfers, or both during the initial no-interest period (it all depends on the card).
These cards can help you consolidate credit card debt by moving balances to a balance transfer credit card or pay for new purchases without incurring interest over time.
There are various peculiarities concerning 0% APR cards that you should be aware of before selecting one, as we describe below.
1. The 0% APR term is not applicable to all transactions.
While a 0% APR offer may pique your interest, you should be aware that the promotional financing may not necessarily apply to all purchases made with your card. New purchases and balance transfers are common examples of transactions that qualify for no-interest financing. Cash advances and such acts are not permitted.
2. The length of the interest-free term differs depending on the type of transaction.
In some circumstances, the intro period for one transaction may be longer than for another. The Discover it® Balance Transfer offers an introductory 0% APR period on balance transfers for the first 18 months and an introductory 0% APR period on purchases for the first six months (after, 12.24 percent to 23.24 percent variable APR).
Furthermore, some cards only offer a 0% APR on balance transfers or purchases. For example, the Citi® Double Cash Card offers 0% APR on balance transfers for the first 18 months (after that, 14.74 percent to 24.74 percent, variable APR), but no special financing for purchases. New purchases will be subject to a variable APR ranging from 14.74 percent to 24.74 percent. An introductory balance transfer fee of 3% of each transfer (minimum $5) done within the first four months of account opening applies. Following that, your cost will be 5% of each transfer (minimum $5).