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Credit Karma Guide to 0% APR on Credit Cards


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If you’re frustrated with high-interest credit card debt, there may be another way. In this guide, we’ll introduce you to the concept of 0% APR on credit cards. Whether you want to take advantage of a 0% APR offer for balance transfers or purchases, it may help you save a lot of cash while paying off your debt. We’ll look at how to do that — and how to create a debt payoff plan you can stick to.


High interest. Those are two words you rarely want to hear in the context of credit card debt. If you’re trying to chip away at your debt but feel defeated by interest charges, you might think it’s impossible to get ahead.

But before you swallow hard and accept high-interest debt as a fact of life, hear us out. What if you could transfer that debt to a new credit card with a 0% APR for a limited time?

That’s called a 0% intro APR offer for balance transfers, and it’s a real thing. A 0% introductory APR offer on balance transfers means you won’t be charged interest for a certain period of time on a balance transferred from another credit card.

Planning to make a big purchase in the near-future? You may also be interested in a 0% intro APR offer for purchases. This means you won’t be charged interest on new purchases for a certain period of time, so long as you make at least the minimum payments due on your statement.

Keep in mind, these offers typically apply only for a short period of time — usually between 12 and 21 months, depending on the card. And while they really can help you save a ton of cash, the truth is that they’re not for everybody.

In this guide, we’ll go over all the factors you’ll want to consider when applying for a credit card with a 0% APR offer. These credit cards aren’t something you just apply for without a game plan. If you don’t think ahead, you could actually end up spending more and staying in debt longer.

The good news? We’ve got you covered with everything you need to know to get started.


What we mean when we talk about APR

A credit card’s APR is one of its most important features, but what the heck does APR even mean?

APR stands for annual percentage rate, and it refers to a credit card’s interest rate. Put simply, it’s the price you’ll pay for borrowing money with that credit card. Although APR is expressed as an annual rate, your credit card company uses it to calculate the interest charged during your monthly statement period.

Don’t want to worry about paying interest? Credit card companies generally offer a grace period for new purchases. It’s a brief window between the end of your card’s billing cycle and the date your payment is actually due. With most cards, if you pay off your balance in full and on time and have no outstanding cash advances, then you won’t owe a single penny of interest on new purchases during the grace period.   

The two types of APR offers

As we mentioned above, there’s more than one type of 0% APR offer. These offers are typically designed for two specific situations.

If you have existing credit card debt, you can take advantage of a 0% APR offer to transfer your balance and pay down that debt faster since you won’t have to worry about paying the interest too. Another type of 0% APR offer applies to new purchases rather than existing credit card debt.

Let’s break down both types to see which makes more sense for you.

1) 0% APR offers for balance transfers

A 0% introductory APR offer on balance transfers means you won’t be charged interest on a balance you transfer from another credit card for a certain period of time. This can be a huge help if you’re trying to pay off your debt but high interest charges are getting in the way.

Just keep in mind, these offers almost always come with a time limit. If you don’t pay off your full balance within the intro period, you might have to pay a much higher interest rate on the remainder.

2) 0% APR offers for purchases

A purchase APR is the interest rate applied to your purchases if you carry a balance on your credit card. So if you apply for a credit card with a 0% introductory purchase APR, that means you won’t be charged interest on your purchases for a certain period of time as determined by your credit card company.

These cards can come in handy if you need to make a large purchase. In fact, the very laptop I’m using to type out these words was bought with a 0% APR credit card and paid off within a few months.

It’s important to note that using these types of credit cards takes a lot of discipline. You’ll need to compare credit card offers, make a plan to pay off your debt and avoid using your card to rack up new debt while you pay off existing debt.

If you know you’ll have a hard time staying disciplined, then a credit card with a 0% intro APR offer might not be for you.

QUICK GUIDE

How do you know if you'll save money by getting a 0% APR card?

Using a 0% APR card can potentially save you from interest charges. But is it actually worth it?

The answer may depend on the card you choose. Some cards charge an annual fee or a fee to transfer your balance, and those fees could end up offsetting whatever you save in interest charges. If you don’t do the math ahead of time, you might actually end up paying more money in the long run.

Luckily, you don’t need to sit down with any crazy amortization tables or confusing spreadsheets. Credit Karma offers a range of free financial tools and calculators to help make your decision easier.  

Simply plug in the details for your own debt and compare: Does the amount of money you’ll save in interest outweigh any fees you’ll have to pay?

Let’s look at an example.

Say you currently have $5,000 worth of debt on a credit card with a 15% APR, and you’re making a $250 monthly payment toward the card. In this case, you’d pay the card off in 24 months and pay $790 in interest, according to Credit Karma’s debt repayment calculator.

But, if you paid a 3% balance transfer fee ($150) to move that debt onto a credit card offering 0% intro APR for 24 months and continued making monthly $250 payments?

It would be well worth it because you’d be able to pay off your debt in 20 months instead of 24, and you’d save $640 even after paying the balance transfer fee. That’s the power that paying no interest brings to the table.

How do you choose a 0% APR card?

At first glance, these types of credit card offers can be more confusing to sort out than a bag of angry cats. It can help to focus on these specific details when evaluating which card is best for you:

  • Annual fee: How much, if anything, will you need to pay to keep this card? If paying off debt quickly is your top priority, you might want to zero in on cards with a $0 annual fee.
  • Balance transfer fee: How much will it cost you to transfer an existing credit card balance to your new card? Some cards charge a balance transfer fee of up to 5% ($5 minimum), though they may waive this fee if you transfer your balance within a certain period of time from account opening.
  • Intro period: How long does the 0% APR period last? Will you be able to pay off your debt by the time the period ends?
  • Regular APR for purchases and balance transfers: If you use the card and carry a balance after the intro period is up, what will you pay in interest?

Consider your goals and use them as a guide while you narrow down your choices. For example, if you know you can pay off your debt within 12 months, then why apply for a 0% APR card with an 18-month intro period? Instead, you might want to shop for a card with a 12-month intro period — especially if it comes with lower fees or a lower regular APR.

Make sure to tally up any fees to see what your total cost will be when comparing offers. As credit card expert and consumer advocate Beverly Harzog notes, balance transfer fees can especially add up.

To illustrate her point, she uses an example of a card with a balance transfer fee of 3%. “If you want to transfer a $5,000 balance, then you’d have to pay a $150 transfer fee,” she says. “The total you have to pay back then becomes $5,150.”

What credit scores do I need to be approved for a 0% APR card?

A lot of factors go into a credit card company’s decision to approve or deny your application, so there are no “magic” scores that guarantee approval. With that said, the better your credit scores, the more likely you are to be approved.

That’s one reason why it’s a good idea to keep tabs on your Credit Karma dashboard. Not only can you check out your free credit scores from TransUnion and Equifax, but you can see how your credit health breaks down into different factors and use our free Credit Score Simulator to see what might happen to your credit scores in different scenarios.

In fact, you can even use your Credit Karma account to see your approval odds for specific credit cards — a very handy feature, indeed.

QUICK GUIDE

How do I know if I'm likely to be approved?

We try to make this easy for you. You can check out your approval odds for individual credit cards simply by logging into your Credit Karma account. On desktop, click on “Search All Credit Cards” under the “Credit Cards” drop-down menu at the top of the page to be taken to the credit card page.

You’ll see a range of filters to choose from. Select “0% Intro Rates” from the Feature filter. From there, you can sort by features such as user rating, balance transfer APR and purchase intro APR.

Even better, we’ll show you what your current approval odds are for each card. Nothing is guaranteed, of course, but at least now you can get an idea of which cards are worth applying for.

What to do if you’re not approved

It can happen to anyone, and for a variety of reasons. Luckily, you may still have a way to get your application approved, according to Debra Schroeder, a credit card expert with Traveling Well for Less.

“Call the reconsideration line to see if the bank will reconsider your application,” she says. (You can easily search the internet for the phone number associated with your specific card.) “If that doesn’t work, review your credit reports and credit card application for any errors.”

You can get a free copy of your full credit report from each bureau once per year by visiting annualcreditreport.com. If you find any mistakes, make sure to dispute the errors with the credit bureaus or with TransUnion via Credit Karma’s Direct Dispute™ tool.

If you’ve done all of the above and still can’t get approved, that’s OK. Your best bet is to keep working on improving your credit health and apply again at a later date.

Don’t be tempted by your new 0% APR credit card

If you’re paying a ton of money in interest each month, a credit card with 0% APR can seem like a godsend. But these types of cards come with their own risks to watch out for.

First, some 0% APR cards — especially ones from large retailers — aren’t really 0% APR cards at all. They’re somewhat sneakily disguised as deferred interest cards, according to Alex Gerard, credit card expert and founder of Cards Mix, who explains how to spot these tricksters and how they work:

“Usually, they are advertised as ‘no interest if paid in full in X months’ cards,” Gerard explains. “These cards charge no interest, but after the end of the introductory period, if you haven’t paid the balance in full, you will owe the interest on the full length of the intro period.”

In other words, if you haven’t paid off your balance in full by the end of the intro period, you may be on the hook for paying interest on all of it. That’s why it’s especially important to carefully read your credit card’s terms and conditions so you know what you’re getting into. (It won’t take you all day, we promise.)

Oh, and one other thing to look out for: You might be tempted to buy more stuff, especially since you know you won’t pay any interest on it right now. Trust us, that’s not a good move.

“It’s a false sense of security and can lead to higher credit card balances unless the person is organized and has a plan to pay off their debt,” Schroeder says.

QUICK GUIDE

How to create a plan to pay down your debt

If there’s one thing people are good at, it’s procrastinating. A 0 percent APR offer gives you a great chance to pay off your debt without interest, so why waste it? It’s actually fairly simple to set up a plan so that, by the time the intro period is done, you’ll be debt-free and loving it.

  • To figure out your monthly payment, divide your current credit card debt (or the amount of your new purchase) by the length of the intro period. For example, if you want to pay off $2,000 worth of debt in 12 months, you’d need to make 12 monthly payments of $166.67.
  • Make sure you can fit this monthly payment into your budget. If you can’t, then reconsider whether a credit card with a 0 percent APR offer is right for you.
  • Finally, set up automatic payments with either your bank or your credit card company. That way, you won’t have to lift a finger and your debt will be automatically paid off in a matter of months.

What’s next?

As we hope you’ve learned from this guide, 0% APR offers are not completely foolproof. You’ll need to put in some work upfront to find the best offer for your situation, do the math to see if it’s worth it and then develop a concrete plan to pay your debt off. You’ll also need to resist the urge to spend even more money with your new credit card. (Not always easy, we know.)

But! If you can do those things, a 0% APR credit card might be just the ticket to help you get out of debt.

Ready to take the next steps? Read on to further education yourself about 0% APR offers and balance transfers:

  • 5 Best 0% APR credit card offers compared

    These are some of the most popular 0% credit cards from Credit Karma's partners.

  • What does a 0% APR offer mean?

    A 0% intro APR credit card could be a good fit for you if you’re making a large purchase or paying down debt. Read on to learn about the different types of 0 percent APR offers.

  • How to do a balance transfer in 6 steps

    A balance transfer can be a great way to save money on interest and pay off debt faster, but where do you start? With this step-by-step process, we've broken down how to do a balance transfer.

  • Will a balance transfer hurt my credit score?

    A balance transfer may lead to your scores dipping in the short term. That’s because you’ll decrease your average account age and increase the credit utilization on a single card. But when you use credit responsibly over time, your credit should rise again.


Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors' opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when it’s posted.