Credit Cards

How Does 0 APR Work

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 5 minute read

There are certain cards that can save you a lot of money, but you should be aware of the possible hazards. A wide variety of credit cards are available, each with its own set of advantages and disadvantages. With the correct credit card, you may be able to get the most out of your financial circumstances and demands.

If you need to make a major purchase or transfer a balance from another credit card, zero percent intro APR credit cards might save you a lot of money. With our help, you’ll be able to better understand what 0% APR implies and how credit cards might assist your financial situation.

Exactly what is a 0% introductory APR credit card?

As the name suggests, the interest rate is zero for the duration of the promotional period. If you have a major credit card, promotional offers might last anywhere between six and 21 months. As long as you pay the minimum due on your credit card each month, you won’t be charged interest during the promotional period.

Withdrawal fees and interest will begin accruing once the promotional period expires; unless you pay it off in full, you will be charged interest on any leftover balance. You should be aware that 0% APR programs differ from deferred interest promos in a few ways. Store credit cards and retail financing, in general, both use this strategy and charge no interest for a specified length of time. However, with deferred interest promotions, it is imperative that your debt is paid off before expiration or you’ll have to pay back interest on the initial loan amount.

The ideal course of action is to stay away from deferred interest promotions unless you’re positive that you can pay off the debt within the specified time period. With a 0% APR credit card, you’ll be taking on less risk.

How can a 0% APR deal come to fruition?

You can obtain either one or both of the two types of 0% APR deals depending on whatever credit card you apply for.


In the regular course of things, you’ll have until the end of the month to pay off the balance on your credit card; if not, you’ll owe interest on that amount. You may use your credit card without paying any interest on the balance throughout the promotional period, even if you carry it over from month to month. The only catch is that you must pay at least the minimum amount due each month in order to avoid a late fee. Otherwise, you risk losing your 0% APR promotional offer.

There are no restrictions on what you may charge with a 0% initial purchase APR promotional offer. You may include everything from remodeling your home to buying a new dishwasher. To optimize your savings, there are no fees or other expenditures associated with the deal.

Balance transfers

U.S. Federal Reserve statistics show that in February 2020, the average interest rate on a credit card was 16.61 percent, with variable APRs ranging up to 20 percent. A balance transfer 0% APR program allows you to transfer some or all of the debt from one credit card to another and pay it off interest-free over a certain period of time.

Once the deal ends, you won’t have to pay any interest on the remaining balance. You will only be charged interest on the remaining balance at the conclusion of the promotional term.
If you want to consolidate your credit card debt, consider a balance transfer credit card. The finest balance transfer cards may even let you transfer debt from other sources.
While 0% start balance transfer APR programs have their advantages, there are some drawbacks.

  • An upfront fee of 3 to 5 percent of the transferred amount will be charged by most cards offering promotional balance transfers. It is added to your balance, which you will pay back over time. No balance transfer fees may be found, however, and some credit cards even offer 0% APR deals.
  • If you have a high credit limit, you may not be able to transfer as much money as you’d want. You will only save money on interest on the first $3,000 of your $10,000 debt if you transfer it to a card with a $3,000 limit. Additionally, some balance transfer cards may only provide a 0% APR on transfers requested within a specific time frame after you create your account—typically four months or fewer.
  • Additionally, if you have a credit card that offers a 0% APR on balance transfers but not on purchases, you may not be able to make a purchase until you’ve paid off your transfer in full. The ideal strategy is to avoid using new balance transfer cards for transactions that don’t have an APR advantage of zero percent.
  • Transacting outside of the country incurs a charge, which can range from 3-5 percent depending on the card issuer. Utilize them overseas, they aren’t the ideal solution.

Who may take advantage of a 0% APR credit card?

As long as you qualify, you may benefit from a zero percent APR offer. However, the following are three unique cases in which a 0% APR deal can make a big difference:

  • Paying for a pricey vehicle or house repairs or losing your job? A 0% APR credit card can help you cover the costs of your emergency bills and allow you to pay them down over time without accruing interest.
  • Those who are unable to pay their credit card debts. If you’re having a hard time paying off your credit card debt, it may be because of excessive interest rates. A balance transfer credit card might help you avoid interest payments as you work to pay off your debts, at least for a short period of time.
  • In the early stages of your company’s existence, when you have a lot of costs and little earnings, a 0% APR business credit card may be a good option for you. An established small firm may not qualify for a standard small-business loan, but these offers can still be useful.

Bottom Line

People who are struggling with credit card debt may save a lot of money by taking advantage of zero percent APR credit cards. You may use 0% APR rates to make a significant purchase, pay for an emergency necessity, or transfer debt from a high-interest credit card if you don’t have the income to back it up.

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