Here’s What 0% APR Means (And How You Can Benefit from It)

A 0% APR offer can help you save a lot of money, but is it as good as it seems?
Last updated May 29, 2020 | By Matt Miczulski
Smiling woman with a credit card

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Borrowing money usually comes at a cost. Whether it’s a loan or a credit card, lenders profit from charging interest on the money they lend. For credit cards, this interest rate is typically calculated as a yearly rate, known as the annual percentage rate — or APR.

Sometimes, however, credit card lenders will provide new and existing cardmembers the chance to avoid accruing interest on the money they borrow for a certain amount of time. This is often referred to as a 0% APR period, and it can be hugely beneficial.

Whether it’s for new purchases or transferring an existing balance from another card, a 0% APR offer is a great way to save money by avoiding those pesky interest charges. Here’s all you need to know so you can determine if a 0% APR offer is right for your situation.

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The two types of 0% APR offers

There are two types of 0% APR offers: one for new purchases, and one for balance transfers. While both allow you to avoid paying interest for a certain amount of time, each works differently.

0% APR on balance transfers

A 0% APR offer for balance transfers gives cardmembers the ability to avoid accruing interest for a certain amount of time on balances transferred from other credit cards. After the promotional period ends, remaining balances are typically subject to a variable APR that’s based on your creditworthiness. While this promotion is often targeted towards new cardmembers, existing cardmembers are sometimes provided this offer as well.

Promotional periods for balance transfers will vary from card to card, but it’s not uncommon to see a 0% APR offer for 15 months — or even up to 21 months. For new cardmembers, this period begins at account opening. So if you open a new credit card that has a 0% APR offer on balance transfers for 15 months and you don’t take advantage of this perk until five months in, you’ll only have 10 months left to avoid paying interest.

While this gives you the freedom to avoid paying interest for a set amount of time, it’s important to keep in mind that you’ll be charged interest on any remaining balance when the promotional period ends. Since the interest rate after the promotional period ends is often variable and based on your credit, the 0% interest rate you came to enjoy could jump significantly higher.

A 0% APR balance transfer offer can be a great option if you have a credit card balance you’re trying to pay down, but it’s costing too much in interest. Transferring this balance to a card with a 0% APR offer will allow you to chip away at the balance without getting sidelined by interest charges.

0% APR on purchases

For new purchases, cardmembers can avoid paying interest by utilizing a credit card that offers a 0% APR on purchases. Similar to balance transfer offers, this promotional period often begins for new cardmembers the moment an account is opened. Likewise, any remaining balance when the promotional period ends will likely also be subject to a variable APR based on your credit.

Credit cards that offer 0% APR periods for new purchases can be a huge help if you need to make a large purchase but don’t have the funds to immediately pay it off. These cards allow you to make that purchase and avoid paying interest on it for the duration of the promotional period.

Top cards with a 0% introductory APR for balance transfers

Several credit cards offer a 0% introductory APR on balance transfers, but these promotional periods can vary from card to card. In addition to promotional periods, you should also take other factors into consideration to determine which card is best for you. This can be anything from the card’s annual fee to how the card aligns with your normal day-to-day spending.

Here are the top balance transfer credit cards with a 0% introductory period:

Card name Balance transfer offer Annual fee
Chase Freedom Card 0% intro APR on balance transfers for 15 months $0
Citi Double Cash Card 0% intro APR on balance transfers for 18 months $0
Citi Simplicity Card 0% intro APR on balance transfers for 21 months $0

Top cards with a 0% introductory APR for purchases

Just like balance transfers, several credit cards offer a 0% introductory APR period for purchases. Aside from the duration of this promotional period, you also want to consider card specifics, such as annual fee and how you might continue to benefit from using the card for normal spending outside the 0% APR offer.

Here are the top credit cards offering a 0% introductory APR period for purchases:

Card name Purchase offer Annual fee
Discover it Cash Back 0% APR on purchases for 14 months $0
Chase Freedom Unlimited 0% APR on purchases for 15 months $0
Chase Freedom Card 0% APR on purchases for 15 months $0
Capital One® Quicksilver® Cash Rewards Credit Card 0% APR on purchases for 15 months $0
Blue Cash Everyday Card from American Express 0% APR on purchases for 15 months $0

The bottom line on 0% APR offers

Whether it’s for new purchases or balance transfers, taking advantage of a credit card that offers a 0% APR period can help you save a significant amount of money in interest that you’d otherwise have to pay. It just depends on your situation as to which one is best for you.

Remember that the 0% APR offer you receive eventually ends, and the interest rate on your remaining balance can jump significantly. For balance transfers, this interest rate might even be higher than the interest rate you were initially being charged before you made the transfer.

Keep all this in mind as you determine the best credit card and 0% APR offer for you. If you pay your balance in full before the promotional period ends, you should find a 0% APR offer can help you save a significant amount of money.

Earn Cash Back Twice

Citi Double Cash Card

Citi Double Cash Card

Citi Double Cash Card

Benefits

  • 0% intro APR on balance transfers for 18 months
  • 2% cash back on all purchases - 1% when you buy and 1% when you pay
  • No annual fee