APR stands for “annual percentage rate.” With some financial products, your APR and your interest rate will differ. But credit cards keep it simple — APR and interest rate are interchangeable in regards to a credit card.
If you have a credit card that offers a 0% APR, it simply means you won’t be charged interest on qualifying transactions for a set period of time. This can save you hundreds of dollars in interest charges — as long as you pay off your balance before the introductory period expires.
Typically, 0% APR credit cards provide interest-free periods on purchases and/or balance transfers for 12, 15, 18 or 21 months. Credit cards that offer the longest 0% intro APR periods usually require good to excellent credit — which FICO considers to be a score of 670 to 850.
That said (while rare) it is possible to get a 0% intro APR credit card with limited or fair credit. For example, the Discover it® Student Cash Back is available to cardholders with limited / fair credit and offers a 0% Intro APR for 6 months on purchases. After that, a 17.24% - 26.24% Variable APR applies.
There are two types of 0% APR credit cards:
0% APR on purchases
If you get a card offering a 0% intro APR on purchases, that means you won’t accrue interest on new spending for the duration of the intro period. This can be helpful if you need to pay for a big-ticket item (like furniture or electronics) and need to spread out the payments over time.
0% APR on balance transfers
If you get a credit card offering a 0% intro APR on balance transfers, that means you won’t accrue interest during the intro period on debt moved over from another account. A balance transfer offers breathing room when you’re struggling to pay off high-interest credit card debt, since your entire monthly payment goes toward paying down the principal balance rather than the balance plus interest.
When your 0% introductory APR ends, any balance you’re still carrying on the card will begin to incur interest charges at the regular APR you were approved for when you applied for the card.
If you decide to use the card on an ongoing basis once the intro APR ends, you can avoid interest charges entirely by paying off your balance in full each month. There’s usually a grace period ranging from 21 to 25 days from the end of your billing cycle to your payment due date. If you pay your bill in full by the due date, you should be able to avoid interest charges.
It’s important to read the fine print to see if a “no interest” credit card offers deferred interest or a 0% intro APR. Both allow you to avoid interest charges during a promotional time period, but deferred interest deals are much more risky.
Deferred interest lets you carry a balance from month to month without incurring interest for a set period of time. But if you don’t pay off your charges before the promotional period ends, you’ll be responsible for paying interest on the full purchase amount from the date of the purchase. That can be expensive — especially since deferred interest offers are often available on store or retail cards with high APRs.
In contrast, 0% APR cards start charging interest at the regular APR only on any balance remaining once the intro period ends. So even if you end up paying interest on an unpaid balance, it’s likely to be less expensive than what you’d be charged on a deferred interest card.
Check out our picks for the best 0% APR credits cards.
There aren’t many downsides to 0% intro APR credit cards when used responsibly. To get the most value from your introductory 0% APR period, take the following actions:
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