How 0% Interest Credit Card Offers Work

A 0% introductory APR offer on a credit card can give you some breathing room to pay down your balance.

Anisha SekarAugust 27, 2020

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Chances are you’ve come here because you’ve been getting 0% APR credit card offers in the mail, and you find yourself intrigued.

It makes sense to wonder what the deal is and if any promising offer is too good to be true. These offers are actually very common, and if you qualify for one, you might want to consider taking it. A no-interest credit card can be a sweet deal if you know how to use it and do so responsibly.

0% interest doesn’t last

That 0% interest rate is only good for an introductory period, after which your interest will increase to its regular rate. Some introductory rates last for up to 24 months, but it’s much more common for the O% APR offer to last 6 to 12 months. This interest rate is generally for purchases on the card, and balance transfers are subject to a different fee schedule.

Never make a late payment on these credit card accounts during the introductory period. If you do, your 0% interest rate could be cancelled early.

The issuer still makes money

Even when you’re not being charged interest on purchases, credit card issuers still make money from transaction fees charged to vendors, and often, from fees to you. They hope you’ll keep using the card when the interest comes back, but they know that many people will simply cancel the account when the introductory offer runs out.

Watch out for deferred interest

Deferred interest financing can appear very similar to 0 APR credit card offers. However, there is one key difference: Even if you pay the balance on a deferred interest offer before the 0% interest period runs out, you’ll be responsible for all interest backdated to the opening of the account. In other words, deferred interest isn't waived, it's postponed.

Use it wisely

One of the best uses of a 0% interest credit card offer is to make a large purchase interest-free. However, that only works if you can pay off the balance before the interest rate comes back. When it does, it might be very high, so know the interest rate after the introductory period and plan accordingly. That might mean not taking a 6 months’ no interest offer if you know you can’t get the balance down to zero by then.

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