What does a 0% APR offer mean?

Two friends in an office arguing over what a 0 percent APR offer meansImage: Two friends in an office arguing over what a 0 percent APR offer means

In a Nutshell

A 0% intro APR credit card could be a good fit for you if you’re making a large purchase or paying down debts like credit card balances. Read on to learn about the different types of 0% APR offers.
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These offers are no longer available on our site: Chase Freedom Unlimited®, Capital One® VentureOne® Rewards Credit Card

Even if you’re not looking for another credit card, discovering new credit card offers for a 0% intro APR can be incredibly exciting.

After all, it could mean you don’t have to pay interest on purchases for a certain period of time. But is taking advantage of a 0% intro APR offer the right decision for you?

Before you rush off to apply for a 0% intro APR card, make sure you understand how the offer works, as well as how you plan to use the card.

Types of 0% APR offers

A purchase APR, or annual percentage rate, is the interest rate applied to your purchases if you carry a balance on your credit card. A credit card offer may boast a 0% intro APR, but it may not apply to both balance transfers and purchases.

To find out the specifics of the card you are considering, check the terms and conditions listed on the credit card agreement and a summary of the costs of the credit card listed in a table format (also known as the Schumer box). You can find the Schumer box in credit card agreements.

One type of 0% APR offer is for purchases. A 0% introductory purchase APR means you won’t be charged interest on your purchases for a certain period of time as determined by your credit card company. In order to take advantage of this offer, you’ll need to make at least the minimum payments due on your statement.

For example, if you receive an offer for 12 months, you won’t be charged interest for 12 months on items you’ve purchased in the first year of your account opening. However, any benefits of this offer may be contingent on you paying off your balance in full by the end of the introductory period.

Another type of 0% APR offer is for balance transfers. A 0% introductory APR offer on balance transfers means you’re not charged interest on a balance you transfer from another credit card. This type of offer also comes with a temporary introductory period.

Is it really 0% APR?

In order to tell if a card offers 0% intro APR, you’ll need to scrutinize the fine print.

Even if a card offers a 0% intro APR, you may still have to pay interest on some things. For example, if your 0% intro APR offer was for balance transfers only, then any new purchases on your card may be charged interest unless you pay off your balance in full each month by the due date.

After the introductory period ends, your balance and any new purchases will be subjected to the regular APR (the national average as of June 24, 2017, is 15.96%). This could negate the savings from transferring your balance if you do not pay it off during the introductory period.

You’ll also need to watch for penalty APRs, which are imposed if you’re late on your payments or exceed your credit limit. Penalty APRs can be significantly higher than the regular APR. In fact, a penalty APR can be as high as 29.99%.

In addition to paying the penalty APR, paying late may cause you to lose your introductory APR offer. Also note that even one late payment can hurt your credit.

When is it a good idea to apply for a 0% APR offer credit card?

If you can make the minimum payments to keep the introductory offer, there are a few scenarios when you may want to get a 0% intro APR card.

You want to pay down high-interest credit card debt

High-interest balances can be difficult to pay down, but making a balance transfer with a 0% intro APR card could help ease the burden. Doing so can help you focus on paying off your debt as quickly as possible, ideally during the introductory period.

Keep in mind that some cards will require you to request a balance transfer within a certain timeframe of account opening, so check to see if this is the case.

One more thing to note: Balance transfers are typically subject to a fee — often between 3% and 5% of the balance.

You have a large purchase

Whether you’re saving for a vacation or a major appliance, or you get struck with an unexpected emergency, a credit card with a 0% intro purchase APR can be a handy tool.

Using this credit card can help ease the burden of paying a large amount at once. It can also help you avoid taking out a personal loan, which you may have to pay interest on. Instead, you can parcel out your payments throughout the introductory period without having to pay any interest.

However, this option only works to your advantage if you pay off the balance before the introductory offer ends. Otherwise, you will have to start paying interest on the remaining balance moving forward. To avoid this, make a plan to pay off the card before the introductory offer is over.

Keep in mind that there is a chance you may get denied when applying for a new credit card. Also, if you apply to a card, you will have a hard inquiry on your credit reports. Too many of these within a short timeframe could result in lowering your credit scores.

Credit cards with great 0% intro APR offers

Chase Freedom Unlimited®

From our partner

Chase Freedom Unlimited®

From cardholders in the last year

Chase Freedom Unlimited® has a 0% APR on purchases for the first 15 months from account opening. The variable purchase APR jumps to 14.99% - 23.74% after the intro period.

Your rewards don’t expire as long as you keep your account open, and you can redeem them for cash at any point. Best of all, these benefits come with no annual fee.

Amex EveryDay® Credit Card

The Amex EveryDay® Credit Card also has a $0 annual fee and features an introductory 0% APR on purchases for 15 months. The variable purchase APR jumps to 12.99% - 23.99% after the intro period is up.

If you use your card at least 20 times or more on separate purchases in a billing period, you could earn 20% more points for those purchases (less returns and credits). You’ll also earn 10,000 Membership Rewards® points if you make at least $1,000 worth in purchases within the first 3 months of account opening.

Capital One® VentureOne® Rewards Credit Card

From our partner

If you’re looking for a credit card for travel, this is a good option. It offers reward miles and no foreign transaction fees.

You’ll get a 0% introductory APR on purchases for the first 12 months. After that, the variable APR jumps to 15.49% to 25.49%.

You can also earn a substantial 20,000 bonus miles if you spend at least $500 on purchases within the first three months from account opening. The card lets you earn 1.25 miles for every dollar spent on purchases. There’s no annual fee, and your miles don’t expire.

Bottom line

When considering 0% intro APR credit card offers, carefully review the terms and conditions before applying. You should understand what the introductory period is and what type of offer you’re looking for.

You’ll also want to understand what may happen if you don’t pay off your balance before the introductory offer expires, if you’re late on your payments or if you don’t pay the minimum balance due. A 0% intro offer can be an excellent tool to help you manage debt, but it requires you use the card responsibly to be successful.

About the author: Sarah Li Cain is a money storyteller who believes that everyone can have a happy ending to their money story. Her work has appeared in Business Insider, the Chicago Tribune, Experian.com… Read more.