0% APR Credit Cards: What You Need to Know
The 0% APR credit card is a popular option for borrowers who want to avoid paying interest on their purchases. But what exactly is a 0% APR and more importantly how does it work? In continuation, we will cover everything you need to know on the topic.
You’ve probably seen ads for 0% APR credit cards. They promise to save you money and help you pay off debt without having to pay interest on your purchases. Sounds like a dream come true, but are these offers actually worth it?
If you’re in the market for a new car or house, consider asking if there’s a 0% annual percentage rate on top of the interest rate of your loan. In case your bank has one available, this means that instead of being charged interest every month at an already low rate (say 3%), they’ll charge no interest whatsoever during the promotional period.
This makes sense because banks don’t make any money from charging just 3%. If anything, they lose money by giving out such low rates because people tend not to pay back their loans fully before those terms expire anyway!
What Exactly Is 0% Intro APR?
In the credit card world, introductory offers are often called no-interest rates or 0% intro APR credit cards. These offers can vary widely depending on the lender and its terms. For example, a 0% intro APR may last anywhere from six to 18 months after an account is opened. Other times, it can be as long as 24 months or even 36 months.
Although these offers are often branded as “no interest” periods, don’t get fooled because many of them do have associated APRs that typically range between 9% and 22%. That’s because these introductory offers typically include a balance transfer fee of 3%-5%. However, there are some 0 APR balance transfer credit cards that don’t even charge any costs for making transfers during their introductory period as well.
How Does 0% APR intro Work?
The only way that this is possible is if the credit card company charges you late fees and over-limit fees at their regular rate (which could be pretty high). If there are no late fees or over-limit charges, then the credit card company will have to charge you interest on your balance during the promotional period. This means that they’re making money off of you regardless of whether or not they gave you an initial 0% APR offer.
The key thing to remember with these offers is that they aren’t free money—they’re promotional rates offered by credit card companies so that they can gain customers’ business and make some profit on them without having to give away any money upfront.
Things to Know About 0% APR Credit Cards Before You Apply
Before you apply for a 0% APR credit card, there are a few things you should know.
- Your credit limit could be lower than expected. When applying for a new card, it’s common to get approved for less than the amount of your requested credit limit. If this happens, don’t be discouraged—just think of it as an opportunity to earn more points and miles with your spending.
- Your Apr 0% credit card offer may not last indefinitely. It’s important that you read the terms and conditions of the offer you got carefully so that you won’t be surprised by any unexpected fees or changes down the line (like when time is up). You also want to make sure that any balance transfers made within the grace period will receive this same rate as well.
- There might be balance transfer fees associated with opening this kind of account—so keep that in mind before applying! While some cards do waive these fees during introductory periods, others charge around 3-5%.
The 0% APR does not apply to all transactions
To put it simply, the 0% APR does not apply to all transactions. If you use your card for cash advances or balance transfers the interest will be applied. This even goes for purchases that are paid off in one transaction (such as retail),
You can also check if your bank charges fees on other transactions as well, by looking through your loan agreement.
Your 0% APR offer can be revoked
While some offers will be valid for the life of your credit card, many others are only good for a fixed period of time. After that, you’ll have to pay a higher interest rate. Think about it this way: A bank is offering you a great deal on something and wants to lock you into it as long as possible so they can make more money off your purchases. That’s the reason why they might revoke any offers made at the beginning.
The easiest way to avoid having your 0% APR offer revoked is simply by not making large purchases with it right away.
You should also avoid opening up new accounts on top of any other existing ones that are tied directly or indirectly (via the same issuing bank) to this product—this includes store rewards cards that count toward your credit limit. If an account does get closed unexpectedly due to excessive usage or fraud detection, then call up customer service immediately and ask what happened before proceeding further with them. If their reasoning seems illegitimate then consider switching banks instead!
0% APR only lasts for a limited time
As you can see, it’s important to be aware of when the 0% credit card offers end and how you can avoid getting hit with interest charges. It may also be helpful to know that many banks extend them for an additional six months if you make their minimum monthly payment on time each month.
The main thing to remember is that as long as your balance is paid in full by the end of any given 0% APR period, there will be no interest charged during that time period.
However, if this does not happen and even one payment is made late during this given period then all applicable interest will begin accumulating immediately after the said period ends—even if it’s within 30 days.
Balance transfer fees may apply
Many banks offer credit cards with 0% APR as long as you transfer your balance from another card. This is a great way to save on interest and pay down your debt faster, but choosing the right card can be confusing. There are many different terms to consider when looking at these types of cards, including:
- Balance transfer fees
- Annual fees
- Regular APR (interest rate)
You may not be eligible for a 0% APR offer
Some credit card issuers will limit their offers to customers who have a high credit score, and others will only approve applicants who have a long history of paying their bills on time. If you don’t meet these requirements, don’t worry: there are still plenty of other great incentives available to you!
You may not be approved for the limit you desire. Some people apply for high-limit credit cards because they want the flexibility that comes with having extra cash reserves, but this isn’t always possible when dealing with 0% APR deals (which usually come with restrictions on spending). If your application is denied because of your income or other factors, check out some lower-end offers before giving up hope entirely!
You may not be approved for the limit you desire
If you are a new credit card applicant, it is likely that your first credit card offer will be for a small amount. This can be frustrating if you are trying to make big purchases like furniture or appliances.
However, it’s important to remember that your credit score determines how much of a line of credit you receive from banks and lenders.
Additionally, some banks give out different offers than others do so check around before deciding which is best for you!
How to Qualify for a 0% Intro APR Offer?
To qualify for the best 0% APR credit cards, you need to have a good credit score. The lower your score, the less likely you are to be approved. The average American’s credit score is around 700, while people with excellent scores (over 750) will automatically be approved for these offers.
A few other factors come into play when determining approval like credit history and credit limit on other cards.
Are 0% APR Credit Cards Bad for Your Credit?
0% APR credit cards can be a good option if you need to pay off your balance over time. The key difference between 0% APR cards and some other types of cards is that with these products, interest doesn’t begin accruing until after the introductory period ends.
If you don’t pay off your entire balance before then, though—and most people don’t—the interest will begin adding up on all remaining balances as normal and may not be worth it for many consumers. This is unless they have very high-interest debt or have been offered an unusually low rate on their current card. It also goes without saying that this can hurt your credit score.
How to Take Advantage of the 0% APR Offer?
You can take advantage of 0% APR offers by paying off your balance before the introductory offer ends, avoiding new charges with the card, and paying on time every month.
To avoid making new purchases with your card during its introductory period, set up automatic payments from another account. This will make any purchases made during this time automatically paid for as soon as possible after each statement closes. This may require setting up two separate accounts: one for purchases (to be paid off immediately) and one for all other expenditures (which can be paid when convenient).
Credit cards are a great way to save money, and 0% intro cards offers give consumers the opportunity to pay down debt and make purchases without accruing interest.
However, you should be careful to read the terms and conditions while considering different 0 interest credit card offers because not all 0% APR offers are created equal.
Remember that these credit cards with 0% APR are not right for everyone. But, if you have good or excellent credit and have been paying off your bills on time each month, then this is probably something worth looking into. Also, don’t forget to keep your finances in check so you can avoid getting into any debt in the first place.