CardRates.com Guide: 0% Intro APR
When you browse credit card offers, you’ll see many with offers of a 0% introductory APR. This is a useful tool if used to your advantage.
You Pay No Interest for a Limited Time
Every credit card comes with an interest rate for purchases. When you make purchases on your credit card and carry a balance (meaning you do not pay off your balance in its entirety), you pay interest on that balance. With 0% introductory offers, for a limited time, you pay no interest on your balance.
It allows you to make purchases with your credit card and carry a balance without accruing any interest. All of the payments you make toward your card during that period go to the principal balance — none of it is wasted on interest payments. It’s essentially a free short-term loan.
The CARD Act of 2009 created many new rules and regulations for credit card issuers. Immediately after the CARD Act, 0% offers were short and hard to find. Now, with a more stable economy and robust credit card market, many experts say these offers are increasing in popularity and sometimes generously long. These offers usually require good credit.
Introductory Offers Typically Last at Least Six Months
One of the rules of the CARD Act is that introductory offers must be in place for at least six months. However, in this competitive credit card market, many issuers are offering much longer periods — sometimes up to 18 months — with 0% interest. Once your introductory period ends, the credit card’s regular APR will kick in. You should be aware of this APR when you receive the card. Any remaining balance you have will be subject to this new APR.
Gives You Time to Pay off Large Purchases & Balances
These 0% intro APR offers are ideal for people who need to make large purchases but need some time to pay it off. Think of it as free financing. For example, if you need to purchase a new TV, laptop or furniture, but you might need a year to pay it off, putting it on an existing card or taking out a loan would normally require interest payments. If you put it on a 0% APR card, you won’t pay any interest on that purchase during the 0% APR window. Make sure it’s fully paid off by the time the regular APR kicks in, otherwise you’ll start paying interest payments on the remaining balance.
Late Payments Put Your 0% APR at Risk
If you exceed your credit limit or make late payments during this promotional period, you may lose your 0% interest rate. During this window, responsible credit card use is imperative. Additionally, you may be tempted to cancel this card once the 0% APR is over. We encourage you not to, as opening and closing credit cards quickly can harm your credit. It’s better to keep that line of credit open if you don’t plan to use it often.
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Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.